AP

Beirut bank standoff exposes desperation of economic crisis

Aug 11, 2022, 6:54 PM | Updated: Aug 12, 2022, 6:57 am

Lebanese soldiers stand guard outside a bank where an armed man has taken hostages, in Beirut, Leba...

Lebanese soldiers stand guard outside a bank where an armed man has taken hostages, in Beirut, Lebanon, Thursday, Aug. 11, 2022. A hostage standoff in which a gunman demanded a Beirut bank let him withdraw his trapped savings so that he could pay his father's medical bills ended seven hours later with the man's surrender Thursday. (AP Photo/Hussein Malla)

(AP Photo/Hussein Malla)


              A protester who arrived to support an armed man who takes hostages inside a bank, shouts slogans against the Lebanese banks, in Beirut, Lebanon, Thursday, Aug. 11, 2022. A hostage standoff in which a gunman demanded a Beirut bank let him withdraw his trapped savings so that he could pay his father's medical bills ended seven hours later with the man's surrender Thursday. (AP Photo/Hussein Malla)
            
              An armed man talks to hostages inside a bank in Beirut, Lebanon, Thursday, Aug. 11, 2022. A Lebanese security official says a man armed with a shotgun has broken into a Beirut bank, holding employees hostage and threatening to set himself ablaze with gasoline unless he receives his trapped saving. (AP Photo/Hussein Malla)
            
              Lebanese soldiers stand guard outside a bank where an armed man has taken hostages, in Beirut, Lebanon, Thursday, Aug. 11, 2022. A hostage standoff in which a gunman demanded a Beirut bank let him withdraw his trapped savings so that he could pay his father's medical bills ended seven hours later with the man's surrender Thursday. (AP Photo/Hussein Malla)

BEIRUT (AP) — A judge ordered a gunman who took up to 10 hostages at a Beirut bank to force the release of his trapped savings to stay behind bars Friday, apparently a bid to prevent copycats as desperation deepens over Lebanon’s economic meltdown.

A few dozen relatives of Bassam al-Sheikh Hussein briefly closed a major road in Beirut, saying that keeping him in jail breaches an agreement reached Thursday. The 42-year-old food-delivery driver surrendered after a seven-hour standoff in return for getting $35,000 of his money and promises that he would only be questioned then set free. No one was injured.

It was the latest reminder of the pain created by Lebanon’s nearly three-year economic and financial crisis, described by the World Bank as one of the world’s worst since the 1850s. Three-quarters of the population are in poverty, corruption is endemic and many are losing hope for quick solutions.

Like most people in Lebanon, Hussein had no access to his money because of banks’ informal controls on flows of money. He had $210,000 at Federal Bank in Beirut and struggled to withdraw some to pay his father’s medical bills and other expenses.

Because taking hostages worked to free up some of Hussein’s savings, releasing him without charges could inspire others to follow suit as people face skyrocketing inflation and a lack of job opportunities. Many celebrated him as a hero, but it was not clear if his actions would lead to wider protests against banks.

“They want to send a message to people that this will not pass easily,” Paul Morcos, founder and owner of Justicia Consulting Law firm in Beirut, said about Hussein’s arrest.

The punishment for taking hostages and threatening people with weapons is usually three months to two years in prison but could reach a life sentence if it was for the purpose of getting money, Morcos said. But he expects Hussein to be released within days or weeks once people forget about what happened.

The international community has demanded reforms to ease Lebanon’s economic crisis, but entrenched political elites, blamed for decades of corruption and mismanagement, have resisted. Talks with the International Monetary Fund have moved slowly as parliament prepares legislation demanded by the IMF for a bailout, including laws on capital controls and those targeting money laundering.

Many of those in power are former warlords and militia commanders from the 1975-90 civil war. The ruling factions use public institutions to accumulate wealth and distribute aid to supporters. Corruption is often ignored, and institutions are undeveloped. As a result, power outages are frequent, trash is often uncollected and tap water is largely undrinkable.

Poverty is rising as prices skyrocket and the Lebanese pound loses more than 90% of its value since October 2019. Most people can only withdraw small amounts of money from banks each month at an exchange rate far worse than that of the unofficial market.

The situation started deteriorating dramatically last year after the state lifted fuel subsidies, leading to a surge in prices of almost all commodities. It came at a time when blackouts lasted for 22 hours a day, putting private generators out of reach for many as people now must pay for fuel in U.S. dollars.

Judicial officials said the judge decided to keep Hussein under arrest because he committed crimes such as taking hostages and threatening people with weapons. The officials, who spoke on condition of anonymity in line with regulations, said it was not clear how long Hussein will be kept in custody.

Hussein’s lawyer, Rafik Ghraizi, who attended the interrogation, told the local Al-Jadeed TV that his client didn’t point his weapon at anyone and had no intention of harming the employees. He said all that Hussein needed was his money back.

In January, a coffee shop owner withdrew $50,000 trapped in a bank in eastern Lebanon after taking employees hostage and threatening to kill them. He was released two weeks later.

When anti-government protests erupted in late 2019, protesters attacked banks, sometimes with Molotov cocktails, and lenders fortified their branches. At one point, police patrolled in front of every bank branch, but that changed after the protests waned.

Caretaker Deputy Prime Minister Saadeh Shami on Friday called on parliament to quickly approve a capital control law. Last year, he put the losses of the financial sector at $69 billion.

“Lebanon is at a crossroad: Reforms and improvement or more collapse. It’s up to us,” Shami, who is leading the talks with the IMF, said in a statement.

Lebanese banks made huge profits over the past decades as they invested much of their money in government treasury bills that paid high interest rates and led to one of the highest debt ratios in the world. This made the Lebanese diaspora and many foreigners put their savings in Lebanese banks and get higher interest rates compared with international markets.

Banks had been criticized for years for making risky investments despite Lebanon’s widely known corruption. In March 2020, Lebanon defaulted for the first time on repaying its debt, which then reached $90 billion, or 170% of gross domestic product.

“Excessive debt accumulation was used to give the illusion of stability and reinforce confidence in the macro-financial system for deposits to continue to flow in,” according to a World Bank report released this month called “Lebanon Public Finance Review: Ponzi Finance?”

An economist said banks are to blame, not Hussein.

“Banks, with the help of politicians, and financial and judicial authorities are taking people as hostages. It is not a depositor who is taking hostages in a bank,” tweeted economist Mounir Younes.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Image: A cargo ship is stuck under the part of the structure of the Francis Scott Key Bridge after ...

Associated Press

Authorities identify 2 bodies recovered at site of Baltimore bridge collapse

A major bridge in Baltimore snapped and collapsed after a container ship rammed into it early Tuesday, and several vehicles fell into the river below.

11 hours ago

Photo: Mountaineer Jim Whittaker has died at 95....

Gene Johnson, The Associated Press

Lou Whittaker, among the most famous American mountaineers, has died at age 95

Lou Whittaker, a legendary American mountaineer who helped lead ascents of Mount Everest, K2 and Denali, has died at age 95.

11 hours ago

File photo: Former Sen. Joe Lieberman speaks in Washington on Jan. 18, 2024....

Associated Press

Former Sen. Joe Lieberman, Democrats’ VP pick in 2000, dead at 82

Former U.S. Sen. Joe Lieberman of Connecticut, who nearly won the vice presidency on the Democratic ticket with Al Gore in 2000, has died.

12 hours ago

islamic state attack...

Vanessa Gera, The Associated Press

What we know after the Islamic State group claims responsibility for Moscow massacre

The Islamic State group has claimed responsibility for an attack on a suburban Moscow concert hall that killed at least 133 people.

4 days ago

Moscow shooting...

The Associated Press

Russia: 60 dead, 145 injured in concert hall raid; Islamic State group claims responsibility

Assailants burst into a concert hall in Moscow on Friday and sprayed the crowd with gunfire, killing over 60 people, injuring more than 100.

6 days ago

Photo: Britain's Kate, Duchess of Cambridge visits 282 (East Ham) Squadron, RAF Air Cadets, Cornwel...

Associated Press

Kate Middleton announces she has cancer, is undergoing chemotherapy

Kate Middleton, Princess of Wales, says she is undergoing chemotherapy to treat cancer. She has been out of view since Christmas.

6 days ago

Beirut bank standoff exposes desperation of economic crisis