Lebanon defaulted on its sovereign debt for the first time in March this year. It was bound to happen, because its economic model was fundamentally broken. Decades of dismantling organized labor while concentrating power has left Lebanon one of the most unequal societies in the world: the bottom 50 percent earn about the same as the top 0.1 percent, while the top 10 percent takes home almost 60 percent of incomes. The top 1 percent in Lebanon owns more of its national wealth than their counterparts in China, Russia, and the United States.

Before the financial crisis in 2008, Lebanon was a hub for trade, finance, and tourism, which accounted for about a third of incomes. Together with remittances and transfers, these service sectors almost financed imports from abroad. But unlike most other emerging market economies with similar levels of imports, Lebanon had basically no merchandise exports. The domestic economy was based around several market monopolies and unions had been decimated. So, to finance spending on imports, it relied on foreign direct investments and services exports. 

In the years preceding the crisis it allowed the central bank, Banque Du Liban, to accumulate foreign reserves. More money flowed into the country than left, even with a chronically negative trade balance of around 30 percent of GDP every year. It also meant the economy was vulnerable to external shocks. The economy was concentrated in the hands of the few, who had fought to suppress broad ownership of production and undertaken few productive investment domestically.