By Osama Al-Sharif
July 22, 2020
Lebanon’s economy is in freefall and the chances of the government of Hassan Diab being able to strike a last-minute deal with the International Monetary Fund (IMF) to secure billions of dollars in a rescue package are slim at best. Last week, Minister of Economy and Trade Raoul Nehme admitted that the economic crisis had turned Lebanon into a failed state. The lira has lost almost 80 percent of its value against the dollar since nationwide protests first erupted last October.
But at the core of the economic crisis — which has led to hyperinflation, a spike in unemployment and poverty rates, the collapse of basic public services and an acute shortage of foreign currency — is a political impasse that has been decades in the making. Lebanon’s once-vibrant ethnic and sectarian diversity is now its curse. A political power-sharing deal, primarily between Maronites, Sunnis and Shiites, which goes back as far as the 1940s, has polarized the country, allowing one group, the Hezbollah militia, to dominate the political arena.
Lebanon’s weakening institutions have allowed for the spread of corruption and abuse of power by its political elite. This has been going on for decades. At the heart of the financial debacle is Lebanon’s central bank, which has been involved in what can only be described as a Ponzi scheme to lure billions of dollars in local and foreign deposits with ludicrously high interest rates. That money was then lent to the government at low rates. The fate of billions of dollars handed to successive governments remains unknown. Last year, that proverbial house of cards suddenly collapsed.
But regional and foreign governments are not dashing to help Lebanon. The dominance of Hezbollah over Lebanese politics has isolated the country. Hezbollah’s leaders admit that they are an organic ideological extension of the Islamic Republic of Iran. Their financial and military dependence on Tehran has come at an exorbitant cost. An unholy alliance between President Michel Aoun’s Free Patriotic Movement (FPM), headed by his son-in-law Gebran Bassil, and Hezbollah has forced the country to abandon its previous policy of self-distancing from regional conflicts.
Under the rising political and military influence of Hezbollah, Lebanon has found itself immersed in the bloody Syrian civil war. Hezbollah’s foreign activities now also include Iraq and Yemen. By doing so, Hezbollah has polarized the Lebanese, who in the past had backed the group’s efforts to confront and repulse Israeli aggression. Now, Hezbollah’s agenda, as spelled out by its leader Hassan Nasrallah, is one and the same as that of Tehran’s extremists.
With the imminent economic collapse and the reality of the political hegemony of Hezbollah over the Cabinet and the presidency, the prospects of the IMF handing the government a lifeline seem remote. While the IMF, the US and France demand genuine economic reforms, the reality is that Hezbollah is Lebanon’s biggest problem. The country’s very survival is at stake as the showdown between the US and Iran intensifies.
While calls for genuine dialogue among the ruling elite are sounded every now and then, the reality is that Lebanon’s oligarchs have little concern in reaching a compromise that would damage their own personal interests. The recent protests have brought members of all sects together because inflation, poverty and unemployment have spared no one and have crossed sectarian divides.
In the midst of this uncertainty comes the call by Maronite Patriarch Cardinal Bechara Boutros Al-Rahi for Lebanon to be neutral, except in its conflict with the “Israeli enemy.” This call is important and should resonate across the country. It is directed at the Hezbollah-FPM alliance, whose relationship can only be described as symbiotic. It was not surprising that Hezbollah rebuffed the call, while Bassil did not embrace it completely.
The sad reality is that Hezbollah, which has emerged as the key player on the Lebanese stage, has its own priorities that are anchored to a foreign ideological base. It is in no mood to amend the election law, which allows it to control the legislature, nor is it willing to respond to calls to put its arsenal under the army’s control, the latter being the only remaining neutral institution.
Moreover, it continues to defy the state by overseeing the smuggling of oil products to war-torn Syria while Lebanon is witnessing an endemic energy crisis. In short, Hezbollah has taken Lebanon hostage.
Lebanon’s future looks grim and its economic woes are turning into a grave humanitarian crisis affecting the majority of its citizens. The failure to contain the spread of the coronavirus disease only adds to the country’s plight. This state of paralysis will continue, as the political elite pins its hopes on an external bailout that could save the day; but this wait could be in vain. The price for a bailout is hefty and Hezbollah knows that very well. Its fate, as well as that of Lebanon, is firmly linked to the outcome of the US-Iran faceoff.