BEIRUT (Reuters) - Lebanon is set to default on its sovereign debt for the first time after the government suspended a repayment, saying foreign currency reserves are critically low and the country cannot afford to pay.
It marks a new phase in a financial and economic crisis that is seen as the biggest threat to the country’s stability since the 1975-90 civil war.
The long-brewing crisis came to a head last October as capital inflows slowed down and protests erupted over corruption and bad governance.
The local currency has lost around 40% of its value against the dollar, banks are enforcing tight curbs on access to cash and ordinary Lebanese are grappling with lost jobs and inflation.
Here are Lebanon’s main previous post-war upheavals.
Former Lebanese Prime Minister Rafik al-Hariri is killed on Feb. 14 when a massive bomb exploded as his motorcade traveled through Beirut; 21 others also died.
A combination of subsequent mass demonstrations and international pressure force Syria to withdraw troops from Lebanon. Lebanese Shi’ite allies of Damascus stage their own big rallies in support of Syria.
Lebanon enters a new era free of Syrian domination. Hezbollah, an Iran-backed group and close ally of Damascus, enters government for the first time.
In July, Hezbollah crosses the border into Israel, kidnaps two Israeli soldiers and kills others, sparking a five-week war. At least 1,200 people in Lebanon and 158 Israelis are killed.
After the war, tensions in Lebanon simmer over Hezbollah’s powerful arsenal. In November, Hezbollah and its allies quit the cabinet led by Western-backed Prime Minister Fouad Siniora and organize street protests against it.
Hezbollah and its allies maintain a sit-in protest against the Siniora government for the entire year. Their stated demand is veto power in the government.
In May, fighting erupts at a Palestinian camp in northern Lebanon between the Lebanese army and Sunni Islamist militants of the Fatah al-Islam group. Thousands of Palestinian refugees are forced to flee the Nahr al-Bared camp. In September Lebanese troops seize complete control of the camp after more than three months of fighting which kills more than 300 people.
May 6, 2008 - Siniora’s cabinet accuses Hezbollah of running a private telecoms network and installing spy cameras at Beirut airport. The cabinet vows legal action against the network.
May 7 - Hezbollah said the move against its telecoms network was a declaration of war by the government. After a brief civil conflict Hezbollah takes control of mainly Muslim west Beirut.
May 21 - After mediation, rival leaders sign a deal in Qatar to end 18 months of political conflict. Parliament elects Michel Suleiman, the army chief, as president.
In January, Saad al-Hariri’s first government is toppled when Hezbollah and its allies quit because of tensions over the U.N.-backed Special Tribunal for Lebanon.
The tribunal later indicts four senior members of Hezbollah for the murder of Rafik al-Hariri. Hezbollah denies any role in the assassination. Its leader Sayyed Hassan Nasrallah said the authorities would not be able to find the indicted men.
A fifth Hezbollah member is indicted in 2013.
Hezbollah fighters deploy into Syria, secretly at first, to aid Syrian government forces facing a mostly Sunni rebellion against President Bashar al-Assad. The group plays a major role beating back the rebellion.
A crisis about waste erupts when authorities close the main landfill site near Beirut, having arranged no alternative. Large protests broke out as rotting waste filled streets and demonstrators chanted “You stink!” at the government. It became a glaring symbol of a sectarian power system unable to meet basic needs like electricity and water.
Saad al-Hariri’s ties with Saudi Arabia, which is furious at Hezbollah’s expanding role in Lebanon, hit a nadir in November 2017 when it was widely acknowledged Riyadh had forced him to resign and held him in the kingdom. Saudi Arabia and Hariri publicly deny this version of events, though France’s Emmanuel Macron confirmed that Hariri was being held in Saudi Arabia.
Amid stagnant economic growth and slowing capital inflows, the government is under pressure to curb a massive budget deficit.
Proposals to cut the state wage and pension bill meet stiff opposition. The government vows to enact long-delayed reforms but fails to make progress that might unlock foreign support.
Oct. 17 - A government move to tax internet calls ignites big protests against the ruling elite. Lebanese of all sects take part, accusing leaders of corruption and economic mismanagement.
Hariri quits on Oct. 29, against the wishes of Hezbollah. Lebanon is left rudderless as the crisis deepens. A hard currency liquidity crunch leads banks to impose tight curbs on cash withdrawals and transfers abroad.
After two months of talks to form a new, Hariri-led coalition government hit a dead end, Hezbollah and its allies back Hassan Diab, a little-known academic and former education minister, for the post of prime minister.
March 7 - Diab announces Lebanon cannot repay a maturing bond and calls for negotiations to restructure its debt.
Writing by Tom Perry and William Maclean; Editing by Catherine Evans