Syria’s financial crisis tied closely to Lebanon’s

SectorFinancial Markets

Rightly, although for all the wrong reasons, Lebanon has been a frequent fixture in global news bulletins at least since the major explosion that devastated its capital, Beirut, almost a year ago. Most pressing has been an economic crisis that is unprecedented in the history of the modern state. A major failing of the country’s banking sector, which experts have described as a Ponzi scheme, and the resultant lack of foreign currencies have precipitated the much-discussed economic crisis and its many repercussions.

One consequence, however, is rarely discussed: The fact that Lebanon’s neighbor, Syria, which continues to reel from the effects of war, its loss of revenue-generating territory and the drain on its human capital, is also reeling from devastating and seemingly unending economic shocks. One of the most direct effects of the collapse of the Lebanese banking sector is the loss of private Syrian capital. Since Lebanon implemented its 1956 Law of Bank Secrecy (which was only more...