On 14 September Sali Hafiz, her sister and two friends held employees and fellow customers hostage at Blom Bank in Beirut, Lebanon’s capital. Hafiz, however, didn’t see herself as a thief: the 28-year-old interior designer was trying to help her sister get money from her own bank account, frozen since 2019, when strict withdrawal rules were imposed in response to a severe financial crisis.

Hafiz’s was not an isolated case: it was part of a rising wave. She became a folk hero of sorts as a video of her inside the bank holding a toy gun went viral on social media. She managed to withdraw around US$13,000 for her sister’s cancer treatment before going into hiding. When security forces came looking for her, she evaded them by disguising herself as a pregnant woman. After she surrendered, she and her sister received a fine and a six-month travel ban.

A rising trend

In January 2022 a man held nine bank staff members hostage and was able to withdraw US$50,000 from his account. In August, another man engaged in a dispute with his bank manager in Beirut over the release of some of his savings; as he was denied access to the money, he came back with a rifle and a canister of petrol and left with more than US$35,000.

Hafiz was the first woman to dare confront her bank to get her family’s money back. Many others followed: two days after her stunt, at least five banks were held up by depositors, one of them a police officer, demanding access to their own confiscated accounts. Revealing deep public dissatisfaction, people are tending to see those who do this as victims of a corrupt state refused what was rightfully theirs, heroes taking matters into their own hands. In several cases, people have gathered outside the banks to cheer on those involved when news has spread of an ongoing holdup.

Following these incidents, the Association of Banks in Lebanon (ABL) closed banks across the country for five days. But when banks reopened in early October, more depositors stormed them in an attempt to release their funds.

On 3 October, an unarmed depositor managed to withdraw around US$11,000 from his account. At least four incidents took place over the next couple of days. In Beirut, a former police officer armed with a gun demanded US$24,000 from his account to pay debts and cover his son’s tuition and living expenses in Ukraine. He was arrested before he could get hold of his money. Another depositor in the southern city of Tyre recovered US$9,000 after firing a warning shot inside the bank.

Former Lebanese Ambassador Georges Siam, seemingly unarmed, refused to leave his bank in the Hamzieh suburb of Beirut without his money. A member of parliament, Cynthia Zarazir, entered her bank with a group of lawyers and got US$8,500 of her savings following hours of negotiations with the branch manager. The bank initially offered her some of her money at a ridiculously low exchange rate, but she was eventually able to get a more favourable rate.

On 7 October, the government ordered the closure of banks for an indefinite period; however, many continued to operate through back doors and more incidents took place, as reported by Depositors’ Outcry Association, an organisation formed to support people’s attempts to get their money back.

A worsening financial crisis

People have resorted to these extreme measures out of despair: amid a humanitarian crisis that has seen three quarters of the population plunge into poverty, many are struggling to make ends meet without access to their savings. Others have acted out of fear their frozen savings would lose much of their value if they were eventually returned in local currency at a low exchange rate.

The local currency, the Lebanese lira, has long been unstable; since the current crisis started, it has lost more than 90 per cent of its value. That’s why the US dollar is the currency of choice for safekeeping and major transactions, and most depositors have their savings in US dollars. But when the crisis erupted and capital massively flew out of the country, dollars were nowhere to be found. Strict withdrawal rules were imposed in response.

Lebanese banks first closed their doors in October 2019 as protests triggered by proposed new taxes swept the country. Popular anger, which would eventually force Prime Minister Saad Hariri to resign, was directed against both politicians and bankers. For weeks on end, protesters gathered outside the Banque du Liban (BdL), Lebanon’s central bank, to shout ‘thief, thief, thief’ nonstop.

In November 2019, ABL announced capital controls, allowing weekly withdrawals of up to US$1,000 – a measure widely condemned as illegal. Banks reopened with increased security, but the scarcity of dollars stopped people getting even the amounts allowed from their accounts.

Capital controls remained in place but were not centrally regulated, with some banks establishing weekly limits for withdrawals as low as US$200 or US$300. In June 2021, BdL issued a circular allowing depositors to withdraw up to US$400 plus an additional US$400 in Lebanese lira per month, starting in July.

As much of what people are allowed to withdraw is the lira equivalent of a dollar amount, the devaluation of the Lira has caused them major losses. Four different exchange rates are currently in use: in addition to the official rate, pegged to the US dollar since 1997, there are two rates used by banks, the central bank and foreign exchange dealers, and a fourth black-market rate that is closest to the dollar’s actual value. The rate used for withdrawals is very unfavourable, so people end up recovering a fraction of their original savings.

The unification of the exchange rates, one of conditions imposed by the International Monetary Fund (IMF) to release a US$3 billion loan, has been recently announced. It is feared inflation will worsen as a result.

Since 2019 depositors have filed more than 400 lawsuits, most of which remain pending. In some cases, banks closed the accounts of depositors who sued them with little to no legal remedy in local courts. Foreign courts have been more responsive: in December 2021, a French court ordered a Lebanese bank to release US$2.8 million belonging to a client living in France, and in February 2022, a UK court ruled in favour of a depositor with US$4 million held in two banks.

Resistance to reform

Economic and financial mismanagement far preceded the eruption of the crisis in October 2019. According to a World Bank report, for at least 30 years the Lebanese financial system has amounted to a Ponzi scheme run by intertwined political and financial elites for their own benefit.

From 2019 onwards, protest movements have expressed their dissatisfaction with a system designed to exclude them and their rejection of the entire political class, deemed as blatantly self-serving and corrupt. Many see the sectarian power-sharing system as having played itself out. Established on independence in 1947, it was introduced to ensure peaceful coexistence between Lebanon’s diverse population groups but produced toxic by-products in the form of corruption, impunity and a political establishment more concerned about its self-preservation than the welfare of citizens.

The scale of corruption and its deadly effects became abundantly clear in August 2020, when a huge stockpile of ammonium nitrate improperly stored at Beirut’s port for years exploded. The blast killed more than 200 people, wounded 7,000 and displaced 300,000. The evidence pointed at the negligence and corruption of senior officials across the government and security establishment. But over two years later, those responsible continue to enjoy protection and have not been held accountable. Local investigations have repeatedly stalled and demands for an international investigation have gone unanswered.

Following the eruption of the financial crisis, the wave of protests and the Beirut blast, a government desperate for an injection of funding engaged in talks with the IMF. Two years of negotiations resulted in a preliminary agreement reached in April 2022 for the IMF to release its loan if the Lebanese government undertakes financial reforms and implements stronger measures to combat corruption and money laundering.

While many question the authorities’ will to comply with their part of the deal, the legislative initiatives undertaken to that effect were met with street protests. In April people mobilised against a draft bill on capital controls that they fear continues to put depositors’ fates in the hands of the same elite that drove the country into the current crisis. Multiple amended versions of the bill were submitted and discussed over the course of months: due to lack of progress, the bill was eventually withdrawn from parliamentary consideration. The IMF subsequently criticised the Lebanese authorities for their inaction.

In October, parliament passed an amended version of a banking secrecy law; a previous version passed in July had been rejected by the IMF. According to independent parliamentarians and legal advocacy groups, the new version doesn’t meet all IMF conditions either.

Now Lebanon has no president, the term of President Michel Aoun having come to an end, and only a caretaker government charged with doing the basic work of governance amidst a political deadlock in the wake of the May 2022 election. The intricate trade-offs that involve different parliamentary factions agreeing to elect a president and form a government have yet to be completed. More drift is inevitable.

As Lebanese authorities drag their feet, trust in the political and economic establishment further collapses. Even if the reforms the IMF is demanding are eventually passed, people will keep insisting that bigger changes are needed, starting with the reconstruction of the political system on foundations of transparency, accountability and participation and the renewal of the political elite.

Until that happens, it will be no surprise if people continue to take matters into their own hands. Bassam al-Sheikh Hussein, who in August resorted to force to ‘liberate’ some of his savings to pay for his family’s medical bills, said he’ll do it again in a heartbeat. He’s not the only one.