‘It’s cool to have money again’: wealthy Lebanese party out the crisis

Money talks, wealth whispers. Except in Lebanon, a country struggling to exit a deep economic crisis, where wealth has been screaming louder than usual.

On a recent Friday evening, new imported luxury cars lined the streets below Beirut’s Sky Bar. Inside the rooftop venue, waiters wound their way through well-dressed hordes to hand out sparklers and $400 bottles of Dom Pérignon champagne with a sense of urgency reserved for a crisis.

But the closest thing to an emergency was a tequila shortage on one table. “We cleaned them out of Don Julio,” said Jean, a Rolex-wearing 27-year-old back in Beirut visiting from his base in west Africa. “That’s what happens when there are too many high rollers.”

Sky Bar was a popular nightspot well before Lebanon’s crisis began in 2019, but closed its doors that year as anti-establishment protests gripped the nation and a banking crisis morphed into a devastating financial collapse, with gross domestic product contracting by 40 per cent.

Now, however, lavish hospitality is enjoying a resurgence, buoyed by a segment of the population that was insulated from the crisis — or even profited from it — as well as the sharp pressure on the currency that enabled some businesses to pay off debt cheaply.

After reopening in June, Sky Bar swiftly resumed its role as a magnet for foreign tourists, status-conscious locals and wealthy expatriates home for their ritual summer break. For some, Sky Bar’s return has heralded a fresh chapter for Lebanon, one where unfettered ostentation was back in vogue — for the few who can afford it.

“It’s cool to have money again,” said Sandra, a 43-year-old fitness enthusiast shopping at luxury department store Aïshti.

While half the country’s 8,000-plus restaurants, bars, cafés and nightclubs have shut down since 2019, business recently began picking up. About 250 restaurants have opened in 2023, with at least 30 more set to welcome customers before the end of the year, said Tony Ramy, president of the syndicate of hospitality and pâtisserie owners.

“It’s been an excellent season,” Ramy said of the blockbuster summer, which “has created badly needed jobs”.

The lack of a national economic recovery plan and wild currency fluctuations have actually benefited some hospitality companies, according to industry experts. Owners have been able to pay down debt at official exchange rates that did not reflect the true value of the Lebanese pound, helping them to free up capital to reinvest.

Lebanese have long been feted for their ability to party through their darkest days, including 15 years of civil war from 1975-1990 and occupation by foreign forces. “But even during wars and political instability, Lebanese still had their money,” said Nassib Ghobril, chief economist at Beirut’s Byblos Bank.

That changed in 2019: celebrations soon fizzled, with eye-popping excess suddenly frowned upon as the national mood darkened.

But this year Lebanon’s old ways have returned. The country’s Mediterranean beaches have been packed, its restaurants and clubs sold out and million-dollar weddings are back.

Those with money in today’s Lebanon include people who took their money out of the banks early or used their connections to transfer funds abroad, and those who never used the country’s banking system to begin with, analysts say. Others work for foreign companies and are paid in dollars, or receive remittances, estimated at $7bn last year, from relatives abroad.

“There are also new categories of wealth that were created,” Ghobril said. He cited people who profited from the crisis by hoarding subsidised imports, exploiting loopholes in the banking system, or by participating in outright criminal activity, including money laundering.

The estimated 2mn visitors who travelled to Lebanon this summer, including returning expats, also kept on spending.

That forms a stark contrast with the plight of most Lebanese. Since 2019, the Lebanese pound has lost 95 per cent of its value against the dollar. More than three-quarters of Lebanon’s estimated 6mn population lives below the breadline, according to the UN. There are record-breaking numbers of families in food poverty and children out of school, as people continue to be locked out of their savings.

Lebanon is too short of funds to power its national grid, while its politicians are too intransigent to form a government and push through reforms that would unlock badly needed international aid.

Experts say it is hard to tell how much of Lebanon’s population can still afford basic goods, let alone luxury items. The $10bn economy is largely dollarised and cash-based, a byproduct of the financial collapse and bank failure.

About 5-10 per cent of the population have incomes close to what they were earning in 2019, say some economists. “But that’s not what we’re seeing given the level of economic activity: there’s purchasing power whether we like it or not,” said Ghobril, who suggested that 25 per cent of the population have regained most or all of their pre-crisis incomes.

Bazalt, a Japanese fusion restaurant in the heart of Beirut, has been solidly booked since it opened in June. Housed in a former bank, guests can sip on cocktails, eat truffle-covered pizzas or enjoy the omakase chef-curated offering while DJs spin dance music that reverberates through the basalt-encased eatery.

A 25-course set sushi menu costs $150 per head — equivalent to six months of a civil servant’s salary — and is replete with imported Japanese fish and gold-leaf garnish.

“We’ve never seen business like this,” said Tarek Karam, Bazalt’s co-owner. The restaurant expected to recoup its investment within two and a half years “but we’re currently on track to finish in just 16 months”.

Karam attributes Bazalt’s success not just to tourists, but also to well-heeled locals who have an underestimated purchasing power. “Tourists are great, but what we’ve been seeing is high demand from locals for restaurants such as ours. They come and they spend big.”

Lebanon’s nouveaux pauvres, its former moneyed elite, are quick to show their disdain for these nouveaux riches, or as one high-end restaurateur put it: “the customs officials taking bribes, the diesel generator operators or the money exchange guys who turned a profit”.

“I hate talking about social class, but these are not the kind of people I would have let into my establishments before the crisis,” he said.

“But, like everyone in Lebanon these days, I’ve had to adjust my businesses to their gaudier tastes.”

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