Lebanon on the Brink
While we fight a pandemic, a financial crisis could make the nation a field for great power rivals.
|Danielle Pletka||May 8|| 25||11|
While the world is obsessed with COVID and COVID-generated challenges, much that is bad has gotten worse. And at the vortex of this disaster is the nation of Lebanon. People in what was once called the Switzerland of the Middle East are starving. Banks recently rationed withdrawals to $500 before closing down completely. The nation’s de facto Hezbollah government is still doing Iran’s bidding—assuming spiritual leadership of Iranian proxy armies after Qassem Soleimani’s death, for example—while debating the wisdom of an IMF bailout. But while the Islamic Republic of Iran is still calling the political shots, vultures from Beijing are circling, eyeing tasty infrastructure assets like ports and airports as well as soft power influence through Lebanon’s universities. Meanwhile, Lebanon as a sovereign nation collapses.
How serious is the Lebanese disaster? How feckless are the players on the political scene? How great are the prospects for recovery? Things are so bad that even the Israelis have given up. Jerusalem now treats its neighbor—once important enough that two wars and a lengthy occupation resulted—as a hopeless case, managed through drone surveillance, occasional deterrent strikes, but addressing complaints to Tehran, negotiating terms with Moscow and often focusing attacks, when necessary, in Syria. Yes, apart from its status as a Hezbollah staging ground, Lebanon is hardly important enough to waste ammunition.
How did we get here? It’s not just the pandemic, though that is part of it, even if Lebanese authorities report “only” 25 dead from the coronavirus. The IMF projects the economy will shrink by 12 percent this year. Much of the problem is—surprise—caused by the Hezbollah government. Investors already leery about Lebanon’s stability have exited in droves. And Germany’s recent decision to blacklist Hezbollah (both the political and military wings) has exacerbated fears. Between de facto Iranian leadership, feckless local politicians, spillover problems from Syria, and the collapsing global economy, Lebanon is circling the drain.
Last month, the Hezbollah-led government for the first time defaulted on over a billion in Eurobonds. Almost half the country was below the poverty line before the COVID-19 outbreak; that number is now close to 75 percent. Its debt burden is 170 percent of GDP, and half the government’s budget goes to servicing that debt. Over the last few months, the Lebanese pound has lost half its value.
So why do we care? For the same reason we needed to care about Syria—if not for the people, for the selfish reason that the country unmanaged would become an operational beachhead for terrorism, a field for great power rivals, a nasty black hole from which no good can emanate. And Lebanon is well on its way. Indeed, as COVID recedes, demonstrators are back in the streets demanding change.
Angry, starving Lebanese aren’t the heart of the government’s woes; they are the byproduct of decades of mismanagement. Corruption is rife: The Saad Hariri government fell in 2019 in the face of angry demonstrators, furious at a system so corrupt it to this day cannot deliver 24 hours a day of electricity to the capital. When Hariri took office in December 2016, word was he needed to become prime minister because he was broke and needed access to the ill-gotten gains only a seat in government could award. Now he’s gone, and Hezbollah’s man, the nominally independent Hassan Diab, has Hariri’s legacy of economic woes, the nightmare of a terrorist group managing the government (with all the attendant sanctions), the coronavirus (being managed by the current health minister, Hamad Hassan, Hezbollah leader Hassan Nasrallah’s former personal physician*), and, to boot, the same president and his allegedly grandly corrupt son-in-law, prominent fixer and ex-Foreign Minister Gebran Bassil.
The Lebanese Central Bank, long in the iron grip of Gov. Riad Salameh, is suspected of improprieties as mundane as corruption (nice wedding your son had there in France, governor), but is now wading into significantly deeper water as the Hezbollah government seeks to extend greater control over the Bank’s accounts. Fighting over control of the Bank between Salameh and his erstwhile Hezbollahi friends has dominated the headlines in recent days. Meanwhile, the government, its opponents, and anyone with a Lebanese pound to his name is debating whether the IMF is really going to come to the rescue. Bizarrely, however, for such a desperate set of circumstances, Hezbollah seems to believe it can dictate terms to the IMF.
“We will not accept submitting to (imperialist) tools ... meaning we do not accept submitting to the International Monetary Fund to manage the crisis,” intoned Hezbollah’s deputy leader, Sheikh Naim Qassem, mere weeks ago. This week, his boss, Hezbollah leader Hassan Nasrallah, took a softer tone: “We are not against Lebanon requesting assistance from any side in the world,” Nasrallah said in a video speech. (Nasrallah has not appeared in public in more than a decade for fear of the Israelis.) He did add that he would not be game to “hand over our necks to the International Monetary Fund or any other organization.”
Team Hezbollah and the Hariri-led opposition believe they have cards to play against any demands for austerity, devaluation, or tax hikes from the IMF. For more than a year, senior government officials, kibbitzers, and grifters in Beirut have been contemplating avoiding international financial diktat by selling off Lebanon’s crown jewels (or what passes for them in the modern world) to Beijing. Not to be outdone, a Hariri confidante has mused at how much Chinese lucre could be gained from deals for the Port of Tripoli, an airport near the Syrian border, a new embassy, and a new Chinese investment bank.
Long story short, Lebanon’s slow-motion collapse promises repercussions few can bother contemplating when minds are focused on pandemic-related foreign policy. But the notion that the erstwhile Lebanese state is soon to become a hybrid Iranian-Chinese bot from which all with means flee, and to which all with malign aims flock, seems a catastrophe worth minding. If not, Lebanon promises to join the ranks of Afghanistan, Libya, Yemen, and others in becoming yet another nexus of global threat and local misery.
Photograph of a protester by Marwan Naamani/Picture Alliance/Getty Images.
Correction, May 8: The article originally misidentified the Lebanese health minister.