De facto removal of subsidies on hydrocarbon derivatives

Thursday, October 21, 2021

As noted by Kevan Harris, although “inefficient in structure and regressive in absolute terms of total distribution,” subsidies have historically constituted “the only universal social policy in the Middle East other than primary education” (Harris 2019, 195). This is especially the case in Lebanon, where social protection systems are fragmented and short-reaching. For example, according to the available data collected before the 2019 crisis, 1 in 3 Lebanese and 2 of 3 non-Lebanese did not receive any form of social protection benefits (ILO 2021, 10, 14). Along with massive layoffs and business closures (Dirani 2021), these figures have in all likelihood largely worsened in the last two years. It is in this context that the Lebanese government finally removed the subsidies on hydrocarbon derivatives after months of announcements and warnings. Prices of fuel witnessed a steep rise, and were followed by protests all around the country. The de facto removal of subsidies is not preceded nor succeeded by any social protection policies aiming at mitigating the financial impact of such a measure.