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TM, ®, Copyright © 2021 Piero Scaruffi All rights reserved.

TM, ®, Copyright © 2021 Piero Scaruffi All rights reserved.

Nations in Crisis: Lebanon

  • (july 2021) Nations in Crisis: Lebanon
    Lebanon belongs to the league of countries like Venezuela and Zimbabwe that were relatively rich in a not-too-distant past and are now reduced in extreme poverty. Lebanon is now suffering severe shortages of basic essential goods, including medicines, food, gasoline and electricity. The Lebanese currency is worthless: on the black market one US dollar is worth more than 20,000 liras. The median age in Lebanon is 29.6 years. This means that half the population of Lebanon was born after the civil war that ended in 1990 and probably doesn't realize that the foundations of today's troubles were laid in 1990. After 15 years of civil war that killed about 100,000 people, in 1989 the various factions signed the Taif agreement that went into effect the following year. That treaty had both political and economic detrimental consequences. Politically, Lebanon was pacified by a power-sharing agreement according to which the prime minister must be a Sunni Muslim, the president a Christian (the local Christian sect is called Maronite), and the speaker of parliament a Shiite Muslim (i.e. a member of Hezbollah, a political and military Shiite movement sponsored by Syria and Iran). This kind of power-sharing is replicated throughout the hierarchy. For example, the number of army officers who are Christian, Sunni and Shiite is more or less fixed. The idea of a sectarian power-sharing system goes back to the founding of Lebanon in 1920 when the colonial power, France, wanted the Christian Maronites to dominate the government but also wanted to annex Sunni and Shiite territories. The system was never formalized but was at the origin of the 1975 civil war: basically, Muslims demanded equal power in government (the Muslim population had also increased due to the all the Palestinian refugees who had been kicked out of Israel). The civil war dragged on until Syria invaded Lebanon and forced the militias to stop fighting. Taif ended the fight between Christians and Muslims (and ended Maronite preeminence), but indirectly opened a new can of worm: rivalry between Sunni Muslims and Shiite Muslims (years before this rivalry became bloody all over the Middle East). Initially this rivalry didn't turn violent because Syria was physically occupying Lebanon and maintaining peace. Rafik Hariri was appointed prime minister in 1992, with Syria's approval, and was able to obtain financial help from rich Saudi Arabia. During the civil war Israel had invaded southern Lebanon, ostensibly to protect Christian militias from Hezbollah. In 2000 Israel withdrew from Lebanon, an event that Hezbollah presented as a victory. By coincidence, one month later Syria's dictator died and his son Bashar succeeded him. In 2003 the USA invaded Iraq and terminated Saddam Hussein's rule. George W Bush's rhetoric convinced Bashar Assad that he would be the next target of the USA. True or false, Bashar al-Assad felt that Hariri was siding with his enemies and ordered his assassination in February 2005. Mass protests took place in Lebanon against Syria, resulting in the withdrawal of Syrian troops, but the protesters were almost only Sunnis: the Shiites of Hezbollah couldn't protest against their patron Syria (and maybe Hezbollah's secretary general, Hassan Nasrallah, was hoping to replace Hariri). This increased the rift between Sunnis and Shiites in Lebanon. In July 2006 Hezbollah provoked a brief war with Israel that caused much damage to Lebanon. Public opinion in Lebanon split between those who glorified Hezbollah's "victory" and those who felt that the anti-Israeli stance (an endless state of war) was obsolete and counterproductive. Syria and Hezbollah continued to harass anti-Syrian politicians, journalists, and intellectuals (including several assassinations). Then came the "Arab Spring" and in 2011 the uprising in Syria against Bashar. Hezbollah mobilized to help Bashar, but Bashar's enemies were mostly Sunnis. At the same time Hezbollah caused a crisis in Lebanon by withdrawing from the government of then prime minister Saad Hariri (Rafik Hariri's son) to prevent an international tribunal from publishing the conclusions of an investigation in Rafik's murder, conclusions that clearly pointed at Hezbollah and Syria as the killers. The rift between Sunnis and Shiites was again widening. It didn't help that the Syrian civil war displaced millions of people: 1.5 million Syrian refugees came to Lebanon, on top of the hundreds of thousands of Palestinian families who have lived in Lebanon since the 1970s. Meanwhile, the Christian Maronites (who used to be the majority and the richer sect) were progressively sliding into a mood of marginalization and even fear, especially after the massacres of Christians in Iraq. While Lebanon's Christians didn't take sides between Sunnis and Shiites, both the Assad regime in Syria and Hezbollah in Lebanon acted as protectors of Christian minorities from radical Sunni Islamists like ISIS.
    That's the political consequence of the Taif agreement. Then there was an economic consequence. After 1990 Lebanon received loans from many countries to pay for "reconstruction", and Lebanon's central bank lured foreign loans with astronomical interest rates. Successive Lebanese governments wasted all that money and accumulated one of the world's largest deficits (as a proportion of GDP). As Iran and Hezbollah gained more influence on Lebanon's government and became involved in a power struggle with the Sunni countries (for example in Yemen), the West and the Sunni countries (like Saudi Arabia and the Emirates) stopped the funding. Lebanon, a poor country with no natural resources, is clearly unable to repay that debt. Meanwhile, the political elite have stolen billions of dollars from the public coffers. The sectarian power-sharing system created a system of nepotism, clientelism and patronage at the expense of competence. It has created a self-serving political class. The Lebanese economy has become a textbook case of economic collapse caused by endemic corruption and government incompetence. In 2018 a conference of potential donors was organized in Paris, and donors pledged $11.1 billion in loans and credit for development projects, but upon the condition that Lebanon would get its house in order. Since then Lebanon has been unable to elect a functional government, let alone to clean up its financial mess. Lebanon's economy began to crash in September 2019. In October 2019 people took to the streets in mass protests that marked an important change over the past: the protesters did not belong to a specific sect, and did not protest against one specific sect. The protesters were protesting precisely against the sectarian power-sharing system that has rule Lebanon ever since. Many intellectuals are demanding that the European Union, Britain and the USA freeze the foreign assets of Lebanon's politicians. In August 2020 an explosion rocked Beirut's port, killing about 200 people and destroying entire neighborhoods: it wasn't a terrorist attack, it was yet another case of government mismanagement. The Lebanese currency has plunged to records lows (about 22,000 against the dollar) and the price of food, in local money, has increased 670% between April 2019 and April 2021. Lebanese expatriates who home for the summer vacations feel like billionaires: they can enjoy luxury resorts and fancy restaurants and art galleries at bargain prices.
    Nonetheless, the politicians of the three sects are entrenched in their demands for power, and therefore Lebanon is heading for political and economic implosion. The main villain seems to be Gebran Bassil, the Christian son-in-law of president Michel Aoun, who demands to inherit the post of president and refused a deal with Saad Hariri. The USA has slapped sanctions on Bassil under the Magnitsky Act, whose goal is to target global corruption. But Hezbollah is also preventing the formation of a government, and people gossip that this is dictated by Iran: Iran can offer a solution to the stalemate in Lebanon if the USA revives the nuclear deal. Hezbollah is also benefiting from the economic crisis because it is the only body that can lend money: Hezbollah's financial arm (the al-Qard al-Hasan Association) is funded by Iran is the only "bank" where Lebanese can deposit and withdraw dollars and apply for loans. Remember that Hezbollah has always been a humanitarian organization providing food, health care, education and housing to its followers. Its humanitarian and financial arms, coupled with its military arm, look increasingly like a parallel state. A Lebanese implosion may therefore result in a Hezbollah dictatorship. It would also offer opportunities to ISIS and Al Qaeda. And cause an exodus of refugees towards Europe.
    TM, ®, Copyright © 2021 Piero Scaruffi All rights reserved.
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