August 23, 2021
Less than two days after Hezbollah secretary-general Hasan Nasrallah said that an Iranian fuel ship was on its way to Lebanon, the United States announced that it too was willing to help with address the country’s chronic electricity crisis.
Both the Americans and Iranians are racing to win hearts in Lebanon, as the population struggles to make ends meet in a country, once hailed as the Switzerland of the Middle East, now living in poverty.
The state-owned Électricité du Liban (EDL) is out of money, and the Central Bank of Lebanon cannot help due to its own depleting reserves. Power cuts lasting more than 22 hours a day have become the new norm. The country is already facing a chronic shortage in foreign currency, with private banks locking the dollars of depositors, both big and small, while allowing them to withdraw cash, in small installments, however, and only in Lebanese currency, which has lost more than 90 per cent of its value on the black market.
Last year Energy Minister Raymond Ghajar said that losses to the treasury from the electricity sector reached $1.6 billion annually, almost 3 per cent of Lebanon’s income and half of its public debt. In September 2020, President Michel Aoun warned that if the country did not solve its economic problems, it was one its way to “hell”. Many Lebanese believe that due to the major power shortage during the exceptionally hot summer, they have already landed in hell.
Nasrallah’s statement was aired live on Lebanese television on August 19, prompting US Ambassador to Beirut Dorothy Shea to get on the phone with President Aoun, telling him that the United States had waivered an embargo on sending gas to Lebanon through the Arab Gas Pipeline (AGP). The pipeline, which will transport gas to produce much needed electricity, will run from Egypt to Lebanon, via Jordan and Syria.
Arab Gas Pipeline
The Arab Gas Pipeline is a trans-regional pipeline completed partially in 2003 at a cost of $1.2 billion. It originates in Al Arish in the Sinai Peninsula and runs through Al Aqaba to Syria (a section completed in 2008) via the Syrian city of Homs. From there it leads to Tripoli in northern Lebanon, where the gas will be used to address the country’s chronic electricity problem.
According to a statement by the Lebanese Presidency, Ambassador Shea said that talks were underway with the World Bank to secure funding for the repair of transmission lines and the gas pipelines.
Obstacle 1: Lebanese Government
Funding won’t be easy, however, and there are several obstacles. One is that Lebanon needs a formal cabinet to negotiate the agreement with the World Bank, which it currently does not have. After resigning in August 2020, Prime Minister Hassan Diab leads a caretaker cabinet that is constitutionally incapable of negotiating, or signing off such an agreement.
Talks with the International Monetary Fund (IMF) to secure a $9-10 billion loan to Lebanon have already been suspended because of that constitutional regulation, while an $11 billion loan from international donors (pledged in France back in 2018) has also been on-hold, awaiting administrative and political reforms that Lebanon’s political elite have been unable to fulfil. One of those reforms is clipping the wings of Hezbollah and moving its fighters away from the Lebanese-Israeli border.
Former Prime Minister Saad Hariri was tasked with forming a government in November 2020 but he announced his withdrawal last July. Since then, Najib Mikati has been trying to form a cabinet but he too has not been successful due to differences with President Aoun’s son-in-law, Gibran Bassil.
Obstacle 2: Syria
Due to sanctions on Syria, the Arab Gas Pipeline flow has been interrupted since outbreak of the Syrian war in 2011, with a very heavy toll on Syrian and Lebanese cities, left in complete darkness since early this summer. Before that, Lebanon had benefited from the AGP project in 2009-2010, before it came to a halt in 2011.
Relying on generators, once an option for well-to-do Lebanese, has also become increasingly difficult because the country has no money to pay for fuel imports and smuggling from Syria has been curbed by Syria’s chronic shortages. As a result, even those who can rely on generators are unable to secure fuel to run them.
It is unclear yet how the gas will now flow to Lebanon via Syria. The original agreement was for Syria to be paid with transit fees, but the Syrians are hoping that instead of money, they will get part of the gas to solve their own electricity problem. That, however, would require a waiver on sanctions from the Biden White House.
Last July the US and Russia jointly rewrote UNSCR 2165 (which dates back to 2014), pertaining to cross-border aid into Syria. It mentioned a waiver on assistance to “early recovery projects” which many saw as a creative way to legitimise “early reconstruction.” The resolution specifically mentioned “water, sanitation, health, education and shelter” with nothing about electricity, however.
“It’s an option that raises more questions than answers at the moment,” said Mona Sukkarieh, political risk consultant and co-founder of Middle East Strategic Perspectives. Speaking to Gulf News, she explained: “First, it raises questions of a political nature, in relation to sanctions on Syria – though it seems the US is prepared to facilitate this aspect – and Syria’s willingness to respond favourably.
“It also raises technical questions concerning the condition of the AGP network in Syria, and, more importantly, the ability to transfer Egyptian gas northward beyond Jordan (assuming it gets to Jordan in the first place).”