Analysis by Zeina Dagher, Featured Writer

April 20th, 2021

In the Lebanon of 2021, it’s almost impossible to go a day without hearing people cursing the politicians’ corruption and greed, which led this country to its downfall. These accusations are everywhere, be it in normal daily conversations, on the news, social media, and WhatsApp groups – so much that our leaders almost seem immunized to them, judging by their inertia facing Lebanon’s crises. However, it appears that citizens have also taken on their leaders’ example, ruthlessly exploiting each other in these dire times: corruption reaches the leader and the citizen equally.

Yes, you guessed it, we’re talking about the merciless merchant greed that has been crippling the country for almost a year now. The unlawful practices that merchants and dealers have been using to profit off this country’s misery, like food monopolization and price manipulation, have left the people in interminable queues with empty stomachs, pouring their last shred of dignity into buying the bare essentials to feed their families. Thus, in the “no state” Lebanon game, it’s every citizen for themself. But in a country that supposedly abides by the rule of law, how are such practices that violate the people’s most basic rights so widely permitted?

The truth is that they are heavily sanctioned by the law, but we’re all too familiar with the authorities’ slowness – borderline indifference. This article will focus on showing the history of greedy merchants in times of crises, and how they should be sanctioned by the Lebanese law today.  

It is no secret that with the economic crisis hitting Lebanon hard, prices have increased to a point where basic necessities are no longer affordable for the vast majority of poor-to-middle class communities. Therefore, to help citizens survive, the Lebanese authorities have decided to subsidize a list of some basic food items (sugar, rice, flour, etc.), in order to keep their prices low. Seen from afar, this seemed like a pretty good idea. However, upon closer inspection, anyone can understand that this policy is not without problems. In fact, the head of the Consumer Protection Association, Dr. Zuhair Berro, told Al-Akhbar: "The result of this policy was already known: an accumulation of profits in the pockets of the merchants, the monopoly of goods, and its failure to reach the deserving classes”. In short, the list included foods that aren’t even a necessity (like macadamia nuts, sweetened milk…), subsidized foods are being smuggled to Syria and even Sweden, and this whole policy is a toy in local merchants’ hands. 

For example, some supermarkets require consumers who have bought subsidized goods to buy other unsupported goods. Others only sell one commodity of the subsidized type. Few are stashing tons of subsidized and unsubsidized foods in warehouses to sell them when the dollar rate increases and make more profits. Many are keeping the items priced at a high dollar rate even when that rate has decreased. There are countless examples of unlawful merchant practices that support many economists’ argument that the continuation of this policy is nothing but a useless depletion of the remaining deposits of the Lebanese and mandatory reserves with the BDL. In order to avoid having recurrent confrontations with merchants, direct support for the Lebanese people in need (like supply cards) would possibly be much more effective. 

It is depressing to say that the merchant behavior we are witnessing today is nothing but history repeating itself. In fact, the exact same scenario was playing out during the 1915 Lebanese famine. Faced with a severe inflation, Beiruti people were demanding the municipality intervene directly into the market by legislating and enforcing fair prices. The subsequent pricelist included luxury goods such as coffee and sugar, but also basic necessities.

The tending to the tastes of the upper classes is no surprise, since the council members’ positions were dependent on the (merchant) upper and middle class men’s votes. Therefore, the municipal council would only try to pressure, but not force, the merchants to adhere to the prices suggested and published, intentionally leaving the market open to speculation and profiteering, and opening the door to a “black market”. This naturally led to many critiques, the press appealing to the upper classes to share the sacrifices of the poor who could not find any affordable flour. Merchants would hoard their goods, waiting for an opportune moment to make a maximum profit. Sometimes, they would wait until the market was completely devoid of the product, so that consumers would pay whatever their greed demanded. 

In the absence of the law, the only thing people could do to stop these practices was to appeal to merchants and rich people’s morality. It’s only later in light of severe kerosene shortages that the municipal council ordered limits on cans of kerosene per shop/household, dispatching agents to search houses and stores, and confiscate any exceeding cans. To avoid any price speculation and manipulation, it began selling the kerosene itself from its warehouses at designated times of the day. This strategy wasn’t applied to basic necessities until summer of 1915, when unprecedented inflation made the threat of famine and urban riots become reality. Under pressure from the public and from the military authorities under Jamal Pasha, the municipality imposed punitive measures, such as monetary fines and imprisonment, to merchants who sold goods above the assigned prices.

Moreover, a strategy was elaborated: the municipality bought wheat or flour, and when the cargo arrived in Beirut, policemen would be waiting at the various stations throughout the city to receive it. The wheat or flour was then distributed to vendors (who had to procure permission from the police) at a wholesale price set by the municipality, and storeowners were ordered to sell the provisions at fixed prices or risk the aforementioned sanction.

Nowadays, the law dispenses us from resorting to morality to put a stop to such practices. Aside from the fact that specific documents are required from merchants who want to sell subsidized goods,  consumers are today protected by the Consumer Protection Law that was put in 2005 and updated in 2014. A special Consumer Protection Directorate was also created within the Ministry of economy to help implement it with a mobile application and a hotline for complaints. Moreover, the Consumer Protection Association has been working since 1998 to fight for consumer rights in Lebanon and has been especially active since the start of the economic crisis, creating a platform and a hotline to receive any complaints from consumers. 

Practically, and in our current situation, practices of food monopoly and changing prices are explicitly sanctioned by the decree no. 73 of 9/9/1983 that regulates the possession of and trading in goods, materials and crops, and that preceded the Consumer Protection Law. This decree still covers everything the aforementioned law doesn’t. Articles 6 and 7 of the decree state that the Minister of Economy can fix the maximum limit for service prices, the selling prices of goods, materials and crops, and the maximum percentage of profits in their sale. The authorities won’t impose a unified price for goods to respect our free-market economy and not incur losses on merchants (which is counter-productive), but they can have them respect a maximum profit margin. Article 26 sanctions those who violate this margin with fines, and even imprisonment if the violation was repeated. Articles 8 and 29 sanction in the same way merchants who only sell specific goods (subsidized) to customers who buy them in a specific quantity or with other goods (a practice we’re seeing a lot).  

As for the practice of food monopoly (and other kinds), the law 34/1967, is considered the one that established these monopolies controlling the Lebanese economy, and it definitely needs to be abolished. However, merchants who hoard goods in warehouses to sell them later at a higher price or practice illegal speculation are sanctioned by articles 14, 16 and 34, also with fines and imprisonment. These are only a few examples of violation that the law covers and allows the authorities to take action. In fact, authorities recently received information about subsidized food items being stored in warehouses in Bohssas, Zgharta, and Koura. Extensive investigations took place, and, on February 8th, police forces raided the sites, seizing the items. The owners were fined, and the warehouses were sealed with red wax as prompted by the judicial authorities, which are currently overseeing the ongoing investigations into the matter.

Since the Consumer Protection Law was put in a time where such events could not be predicted, it is crucial today to update it, which the Ministry of Economy plans on doing. In fact, it published an amendment draft in 2020’s spring on its site for the people to see. According to the Minister of Economy, this amendment allows for effective consumer protection with what it requires of an integrated system in terms of monitoring, investigation and penalties, so that the role of the Consumer Protection Law is not limited to controlling violations, but rather goes beyond them through deterrent measures that will limit the violations committed against its provisions […].” It also allows authorities to impose fines without having to go through extensive judiciary procedures. The amendments in relation to today’s illicit practices, subsequent to the economic crisis, can be found at (but are not limited to) articles 50, 61, 64, 74, 75, and 104 of this draft. This draft is yet to be approved.

Moreover, Caretaker Prime Minister Hassan Diab ordered in February the Ministers of Defense, Interior, Finance, and Economy and Trade to draw up an integrated plan in order to take the most effective measures and to strictly implement all measures that would fight monopoly, fraud and price manipulation, especially those related to the basic necessities. Diab also requested a tighter control over all border-crossings and facilities with the aim of preventing and combating smuggling, provided that a joint operations room be established, and that would include representatives of the ministries and security and military agencies concerned with the issue. It would take all the necessary operational and logistical measures for the implementation of the plan that will be approved by the ministers, effective immediately. The Prime Minister will then receive a periodic report on the progress of the followed procedure. However, this remains but ink on paper.

Finally, we’ve seen that the law is present and able to stop illicit merchant practices. What’s needed is, as Diab ordered, a serious unified plan that would make the most out of this law. Back in 1915, authorities waited till the situation seriously degraded to implement serious measures. Will we have to wait for people to die of hunger to start seeing serious measures being taken? We surely hope not, as with a Cabinet that is struggling to come together, the country’s hands are tied and the future certainly does look grim.