This article was published in LOGI's May 2020 newsletter in partnership with Kulluna Irada.
Lebanese security forces have cracked down on cross-border smuggling of subsidized mazoot, seizing over 300,000 litres of the low-quality fuel oil and over a dozen tanker trucks while arresting dozens of people.
The smuggling of mazoot from Lebanon to Syria is facilitated by its subsidized price in Lebanon.
The Central Bank provides U.S dollars to fuel importers at the official rate of 1500 Lebanese Pounds for $1. Meanwhile, the price of mazoot in Syria has soared to more than double the cost in Lebanon as a result of shortages due to the nearly decade-old conflict there.
Losses from fuel oil smuggling amount to some $400 million per year, according to George Brax, a member of Syndicate of Owners of Petrol Stations in Lebanon. This adds up to a serious dent in Lebanon’s dwindling foreign currency reserves, which are being used sparingly to fund imports of necessities such as wheat, fuel and medicine at the old pegged rate.
In effect, the Lebanese taxpayer is subsidizing Syrian fuel consumption at a time of immense economic and financial crisis.
As part of the crackdown effort, security agencies have decided to permanently confiscate all equipment used in the smuggling process. However, significantly reducing the illegal trade is largely tied to political will. Lebanon has a largely porous and ill-defined border with Syria to the east and north, with over 100 informal border crossings that enjoy the protection of various parties and local power players.
The subsidized price in Lebanon also makes fuel smuggling an extremely enticing and lucrative trade, but ending the subsidy would have dire consequences for families already struggling to get by.
Photo Credits: Al Hurra