IMAGINE wandering through the streets of Edinburgh or Glasgow after dark with only car headlights available to pierce the gathering gloom. Every streetlight is turned off because there is simply no electricity.

I don’t mean a brownout in a local quarter. I don’t mean a casual power breakdown. I mean all the electrical power has gone has disappeared. In hospitals, in bakeries, in offices across the land, absolutely everything stops. Welcome to present-day Lebanon and its capital Beirut.

Lebanon this Monday morning is a failed state. I mean that in an absolute, utterly existential way. Once a beacon of prosperity, of culture, and a living example that people of all faiths and many races can live together in reasonable harmony, this small country of six million souls (just a bit more than Scotland) has collapsed. Don’t turn away, dear reader. Lebanon is a harsh lesson on what can befall any state – but particularly a small one – in these dying ember days of the global neoliberal experiment.

Not many decades ago, Lebanon was a relatively rich society. In the mid-1990s, per capita GDP (at purchasing power parity) was around two-thirds of Scotland’s. True, income distribution was badly skewed, but little Lebanon in the 1990s was fast recovering from a bitter, 15-year long civil war. Economic recovery in the last decade of the 20th century was a time of hope. Now all that progress has been turned off along with Lebanon’s electricity grid.

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Much of Lebanon’s modern prosperity was based on banking – like a certain other wee country we could mention. But small countries and bloated banking systems are a dangerous combination in the era of neoliberal free movement of capital. They encourage the illusion that moving electronic cash around the globe represents true wealth – a delusion that grips Scottish as well as Lebanese politicians.

The influx of external cash into the banking system of a small nation is frequently a cause of financial and corruption. Malta and Cyprus now live off tourism and money laundering, with the result their political class has been bought by every sordid interest group under the sun.

So it is in Lebanon. After the civil war – itself the result of destabilising interventions from western, Israeli and Middle Eastern interests happy to use Lebanon as a proxy – the Beirut political class was happy to retreat into personal corruption rather than continue the arduous task of rebuilding a war-torn nation. Result: Lebanon became a giant Ponzi scheme.

It worked like this: the Lebanese central bank borrowed US dollars. To persuade western financial institutions to lend dollars, the Lebanese central bank offered excessive interest rates. Billions of dollars flowed into Lebanon, and lots of people (including the politicians) got rich.

Of course, western financial lenders were aware of the risks but too greedy not to stuff the mouths of Lebanese bankers and politicians with gold. Lebanon’s major creditors include the US BlackRock, the world’s biggest asset manager, and the British Ashmore investment group. The latter is run by billionaire Mark Coombs, a major donor to the Tory Party.

How did the Lebanese central bank pay interest on this debt? By borrowing yet more dollars. Meanwhile, the politicians were careful to cream off their share, syphoning funds intended for public projects. To keep the local population quiescent, the Lebanese political class used some of these borrowed US dollars to subsidise imported goods from the rest of the world, including oil and gas. This underpinned an artificially high living standard in Lebanon – as long as the dollars continued to flow in.

As the years passed, the pliant Lebanese central bank turned to more creative schemes of financial engineering, offering ever-higher interest rates to entice local commercial banks to join the financial merry-go-round.

IN turn, the Lebanese commercial banks obtained US dollars by offering high interest rates to individual depositors. The dollars poured in, especially from the wealthy Lebanese diaspora. In recent years, you could earn 8% on a Lebanese bank account. Amazingly, that high figure rang no alarm bells.

At least not until 2019, when the Lebanese government finally defaulted on one of its bond repayments. The Ponzi scheme had at last run out of fresh dollars. Instantly, all of Lebanon’s debts were downgraded to junk status. Result: a run on Lebanon’s banks, as depositors tried desperately to retrieve their cash.

The well-connected managed to take their money out of the country – $30 billion disappeared abroad instantly. But the middle class and small savers were plunged into poverty. Meanwhile, the Lebanese pound crashed in value and the price of imports soared. Unable to import energy supplies, Lebanon’s electricity was turned off. Inflation soared to a staggering 138% per annum.

Lebanon’s GDP has collapsed by nearly one-third since 2019. This is the sort of mega-disaster you associate with wars. The World Bank has issued a statement concluding that Lebanon’s economic crisis ranks as one of the world’s three most severe since the mid-19th century.

As if that was not enough, Covid also arrived. The Lebanese death toll from the pandemic, at just shy of 9000, is much the same as Scotland’s. That is something of a miracle given the state of the Lebanese hospital system.

Finally, of course, there was the negligent chemical explosion that devastated Beirut harbour in August last year, killing more than 200 people and making 300,000 homeless. Poor, poor Lebanon.

I have always prized the solidarity, connectedness, and cultural vitality of small, compact nations. My desire to see Scotland run its own affairs, stems from that notion. But at the same time, I recognise the dangers faced by face small, independent nations such as Lebanon, when sailing in the shark-infested ocean of neoliberalism.

Nevertheless, the risk is worth running. The alternative – living in the embrace of some larger nation state – only leads to domination, cultural suffocation, and lack of economic control.

Yet with Lebanon in mind (and other examples, such as Malta) any small nation state has to beware the snare of imagining it can act with impunity, especially in regard to international finance.

Lebanon’s political elite may be incompetent and venal – they are. But the original sin lies in their thinking they could be players in the global financial system without being corrupted or traduced nationally.

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If Wall Street or the City of London lend you easy money, beware the outcome. Eventually, ordinary folk will pay the bill with austerity, lack of imported medicines, and soaring energy bills – if not no electricity at all.

Had Scotland voted for independence in 2014 and kept sterling as our currency, any current Scottish Government would have been forced to deal with the pandemic by borrowing English pounds on the same scale as Lebanon, from the same international creditors as Lebanon.

The Scottish diaspora would also have been encouraged to provide pounds, courtesy of unsustainably high interest rates. Eventually, as borrowing ran out, a monstrous austerity mountain would have fallen on ordinary Scots.

I prize the goal of an independent Scotland. But true independence is only possible if Scotland frees itself from the international banking nightmare that plunged Beirut into darkness this weekend.