The circular issued by the Ministry of Tourism, allowing all tourism establishments to price in US dollars until the end of September, has opened the door wide for the existing chaos regarding pricing. This effectively shifts the risks that should be borne by capital owners onto customers, as the primary goal of this directive is to directly seize expatriates' dollars.
So far, according to the president of the Syndicate of Travel and Tourism Offices, Jean Aboud, the number of travel tickets reserved to destinations reaching Beirut is approximately 1.1 million tickets from all countries, averaging about 15,000 passengers daily over a 75-day period starting July 1. If all these bookings, or even a large portion of them, materialize, it indicates that Lebanon will witness a surge of visitors after two years of COVID-19 and an economic crisis dominated by the collapse of the Lebanese pound and multiple exchange rates against the dollar. These visitors will arrive in Lebanon carrying dollars to spend during their stay, whether they are Lebanese expatriates or Arab and foreign tourists. Therefore, Lebanon has welcomed them with a decision from the Minister of Tourism that allows the tourism sector to price invoices in dollars while payment is made in pounds, creating a significant issue in terms of pricing the pound and monitoring compliance.
The Ministry of Tourism justified its unprecedented step by citing "exceptional circumstances" that led to this decision, which is expected to "improve monitoring and comparison of prices." However, regardless of the legal facade the ministry seeks refuge behind, the reality differs significantly. There is no reference to set the exchange rate, while the operational capabilities of the Ministry of Tourism are very limited, leaving these visitors easy prey. How can a state that has failed with all its apparatuses over the past decades, including the last three years of the crisis, to fulfill its most basic duties towards residents regarding price control and holding violators accountable, monitor tourism establishments at the peak of a promising tourist season?
Those concerned in the tourism sector justify pricing in dollars by citing "the instability of the exchange rate," making the fixed dollar pricing "the optimal choice that guarantees transparency and clarity for customers." However, this narrative has a hidden side pointed out by Consumer Association President Zahir Barro: "Everyone is competing to capture the dollars of visitors, and this decision gives preference to tourism establishment owners to obtain dollars instead of brokers." Therefore, Barro believes that this decision is nothing more than a similarity to "the tricks of the Governor of the Central Bank, Riad Salameh, in manipulating the situation with piecemeal solutions that change nothing in the scene, except that they direct dollars to tourism establishment owners."
The essential question raised by the circular is: who determines the exchange rate in the parallel market that tourism establishments are supposed to adopt based on the Ministry of Tourism's decision? This question leads to further inquiries: What happens if there are rapid fluctuations in the exchange rate on the same day, as we have witnessed multiple times in recent years? What rate should be used to issue bills in pounds? What about payment with cards, whether in pounds or dollars? Who determines the price of the bank dollar or the reserved dollar known as "the lollar," and do institutions accept payment through them? Is there a specified rate for payments with cards in Lebanese pounds? There are many questions that lack clear answers amid the entire market moving towards a cash economy, including payment in cash dollars.
Barro clarifies that "dollarization, as a means to control fluctuations in the exchange rate, is inaccurate. In the absence of a clear identity reference for determining the exchange rate in the parallel market, there remains a wide ability to launch alternative platforms for pricing and manipulation. We should expect many tricks."
As for talk of price stability in dollars, it is nothing more than slogans for Barro. "Traders and capital owners can invoke rising costs at any moment due to increasing prices of fuel, transport, and energy, and thus adjust their price lists in dollars to suit them." Determining costs and the portion related to dollars is a matter that is debatable amid declining quality standards and the use of cheap products to increase profitability. It is undeniable that citing international crises will play a role in raising prices and turning profits into dollars that can easily be smuggled abroad in the absence of capital control. Barro indicates that "prices and profit margins have returned to their old rates that preceded the crisis in October 2019, as if we do not live in a collapsed country. Prices have fully dollarized, and more than 95% of goods are priced as they were before the crisis. The profits of traders, which were among the highest in the region, if not in the world, which exceeded about 30% of the profits of traders in neighboring countries, are now recording the same percentages."
In clearer terms, traders’ profits will become significant in relation to previous incomes and will compensate for their purchasing power at the expense of consumers. In other words, the risks of traders will be transferred to consumers, guaranteeing their profits in cash dollars; "the trader receives in cash dollars or its equivalent in Lebanese pounds at market price, while the salaries and incomes of residents continue to collapse. Traders retrieve their dollars with profits, while the people become poorer."
It is surprising that the circular expresses a false concern for consumers, while its hidden goal is to provide tourism establishment owners with a guarantee against currency fluctuation and operational risks without offering any protection for consumers. While the circular emphasizes that tourism establishments must adhere to competitive prices under the threat of legal actions against violators, no one doubts the ability to monitor violations when there is no clear standard for determining these violations, meaning that the circular remains vague in its content. Therefore, Barro believes that "the ministry's warning lacks any legal basis. It is meaningless talk. We are in a free economy, and everyone can price as they wish. Only some goods should adhere to their prices, such as bread, chicken, fuel, and gas, and even those have become subject to chaos."
Despite the severe crisis that Lebanon is experiencing, Lebanese people believe that entertaining themselves by traveling to Turkey is much cheaper than domestic tourism. According to booking numbers, there are about 150,000 seats available on flights heading to various destinations in Turkey, with all current bookings for the month of July being "fully booked." The average cost, varying according to the hotel level chosen by the customer, does not exceed 550 dollars for four nights.
