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Despite optimism brought by the latest Lebanese elections, there is no easy way out from Hezbollah’s grip. The reelection of Hezbollah’s man and Amal’s leader Nabih Al-Berri as speaker of the parliament shows that the “Party of God” is intent on maintaining power. A group of new young faces who will enter parliament indeed show rising opposition to Hezbollah, yet considering the astounding economic and security failures of recent years, it is too little too late. Lebanon has no way out of Iran’s labyrinth.

Lebanon’s current compounded crisis, despite the country’s long-troubled history, is one of the worst episodes of modern Lebanese history. Economic and social indicators seem to point to a worsening situation with no clear solution in sight. The political dysfunction of the country doesn’t seem to be heading toward a resolution, despite mediation and requests from major foreign patrons with multiple failing attempts to form a government. Lebanon’s recent fallout with the Arab Gulf states indicated that the Lebanese government is not able to maintain even its most important relationships.

The World Bank Regional Director of the Mashreq Department Saroj Kumar Jha described the current crisis in Lebanon as the worst in its history and one of the worst in the world. Like all other people of concern, Jha blames the crisis on the endemic corruption for which the country is famous. Decades of political dysfunction and apathy seem to be leaving the country with very few prospects of quick recovery, if any. The Spring 2021 Lebanon Economic Monitor finds Lebanon’s financial crisis one of the top 10 worst since the mid of the 19th century.

Prior to the crisis, Banque du Liban borrowed depositors’ money and used it to support the local currency until the entire system started to come apart in 2019. Suddenly, the entire Lebanese financial sector including the central bank as well as the state became insolvent. Lebanon’s GDP plummeted from $55 billion in 2018 to a meager $20.5 billion in 2021. The banking sector completely stopped lending and doesn’t receive deposits. The lira continues to lose value to ever-rising inflation in the triple digits.

US Lebanon policy always had to counter Hezbollah at its heart. For the longest time prior to the rise of Hezbollah and Iranian threats, the US lacked any real Lebanon policy. But since the Biden administration took office, a new kind of American attention is being directed towards Lebanon—the US seems to be willing to separate its policies in recognition of the system of two powers that exist in and seeks to accommodate the complex reality on the ground to prevent Lebanon’s collapse.

One side of the policy seeks to support the Lebanese army and state. On the other side, the US continues trying to counter Hezbollah’s influence and operations globally. Hezbollah operates a large network of terrorist operatives, illicit finances and drug trafficking that has established solid footing in the Western hemisphere. Countering Hezbollah is not just a Middle East policy option but also a national security priority.

Having a dual policy for one country is not new, but it is important to ask if the objectives of both policies are complementary or competitive. In Lebanon, the US is working hard to prevent the collapse of the Lebanese state and another source of refugee problems in the region. This will likely exacerbate the issue of wider instability in the region, given also the rising regional tensions between Iran and its rivals.

The US is not the only country with these goals in Lebanon; France and the Arab Gulf have been trying to play that part for some time too. Such international parties have been working with partners inside the country and promote desperately needed reform to infuse the Lebanese economy with badly needed aid.

At the same time, the US and other countries are sanctioning corrupt Lebanese figures to incentivize reform and disincentivize inaction. The reform issue is central as almost all international donors conditioned the assistance on the execution of such reforms—about which the Lebanese elites seem unenthusiastic. The issue of sanctioning corrupt officials became urgent especially after U.N. Secretary-General Antonio Guterres said last December that Lebanon’s financial collapse was the result of a “Ponzi scheme” by corrupt officials and politicians.

All international donors condition their assistance to Lebanon on reforms. The International Monetary Fund conditioned assistance of $8 to $10 billion the Lebanese government on the following actions:

  • Tackling head-on the fundamental problem of weak governance. Reforms to enhance transparency must be centered on strengthening anti-corruption framework and improving the performance of state-owned enterprises, particularly the energy sector. This should include audits of the central bank and the electricity provider;
  • Implementing a fiscal strategy, combining deep debt restructuring and reforms to restore credibility, predictability and transparency of the fiscal framework, while expanding the social safety net to protect the most vulnerable;
  • A comprehensive restructuring of the financial sector—recognizing upfront the losses at private banks and the central bank, but doing so in a way that protects smaller depositors;
  • Establishing a credible monetary and exchange rate system, supported by the unification of multiple exchange rates and accompanied temporarily by formal capital controls.

But the political elites in Lebanon demonstrated an alarming lack of urgency and commitment on all these fronts. Some reports even suggested that influential political and economic personalities have worked together to sabotage steps toward implementing the needed reforms that may endanger their interests. This is why Lebanese citizens were eagerly awaiting the latest elections hoping to bring about a political change. But can such a change occur with Hezbollah firmly holding to its power in the country?

Hezbollah’s role in Lebanese politics is undoubtedly the largest obstacle to solving the country’s dysfunctional political impasse, but it is not the only problem. The crisis should be understood as a result of a long drawn-out process of bankruptcy, corruption and political ineptness, in which the political and financial elites all played a large part—the elites used the state’s financial resources to finance their patronage and lacked any fiscal responsibility.

It is only natural that the Biden administration would be focused on the economic crisis in Lebanon, but it seems such a focus is moving to the forefront of American policy. The State Department’s Lebanon policy overview focused entirely on economics and does not mention Hezbollah, nor does it mention Iranian-sponsored terrorism that instrumentalizes Hezbollah troops even outside of Lebanon.

The US needs to remember that while Hezbollah may not figure predominantly when discussing Lebanon’s economic collapse, it does play a central role in its political dysfunction. Hezbollah may not tap into the institutions of the state as much as other actors for patronage, but its terrorist methods mean it instead relies heavily on violence, assassinations and intimidation to achieve its political goals.

Hezbollah is the strongest militant actor in Lebanese politics and is recognized as the dominant political force that holds the single most important veto power in the consortium of Lebanese power. This means that while Hezbollah cannot be directly blamed for the economic corruption and collapse, it is exactly Hezbollah’s position that protects the current dysfunctional arrangement of power and which prevents reform. The party’s solid position in Lebanese politics means that the party’s priorities always come first.

Based on the recent elections and the lack of real prospects of political change, it is impossible to ignore the central role that Hezbollah came to occupy in the Lebanese political landscape with the most important political veto. Those who insist on optimism need to remember that one can either have guns or have politics, but not both. Hezbollah’s armed resistance automatically precludes any possibility of political reform.

The contradictory objectives the US has in Lebanon are not commensurable and cannot be harmonized in a cohesive policy. One should ask whether true reform is even possible under the current political constraints. Can the Lebanese state be expected to produce a new political class that may be more functional politically at the same time it is in Iran’s grasp? The answers to these questions are negative. Even more so given the escalation of Iranian regional aggression, the expansion of Iranian presence in Syria and a possible new nuclear deal with the US. Any hope of a change in Lebanon under the current conditions is futile, so the US must focus its policy instead on countering Hezbollah and Iranian influence more efficiently.

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Hussein Aboubakr Mansour

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