Lebanon is currently passing through one of its worst economic, political and social crises in recent history due to years of political strife and economic downfall. Many have warned about the possibility of state failure. Since October 2019, protests have become a common phenomenon. Former Prime Minister (PM) Saad Hariri’s decision to remove subsidies on daily commodities, hiking petrol prices and most importantly levying taxes on WhatsAapp chats- the cheapest source of communication with Lebanese expatriates have been some of the reasons of these protests .[i] Today people can be seen on the streets carrying placards and banners seeking immediate redressal of their day-to-day ordeals. One such banner read “God will take revenge from you for our plight” reflecting people’s disenchantment with the system and their last resort in the Almighty. The principal slogan of the masses since the inception of the crisis has been, “You all must go”[ii] which indicates loss of faith in all parties. The unique confessional democracy and compulsory coalition politics in Lebanon seem to have failed to deliver either on economic or political fronts.
A new phase of political instability triggered after the resignation of PM Hassan Diab a week after the Beirut Blast in August 2020 and due to the failure of newly- designate PM Mustafa Adeeb to form a technocrat government. Two-time PM Saad Hariri too resigned as PM-designate in July, 2021 after he was not sure of succeeding in forming the government due to existing political factionalism.[iii] Finally it was only in September 2021 when Lebanon was able to get a billionaire PM Najib Miqati, after more than a year of political impasse. PM Miqati succeeded in forming the cabinet consisting of twenty-four ministers. But before Najib Miqati could introduce some measures to bring the tottering economy on track and start fresh negotiations among coalition partners to bring political stability in the country, Lebanese political sphere further became clouded by a set of other crises.
Political Fragility and the Current Crisis
Since its independence in 1943 and under National Pact, Lebanon practices the confessional democratic system where three major sects and religions (Sunni Muslims, Shiite Muslims and Christians) dictate the political trajectory of the country. This confessional mechanism has been adopted because of almost similar proportion of Christians, Sunni Muslims and Shiite Muslims in Lebanon. According to a recent statistic, Sunni Muslims represent around 31.9 percent of the Lebanese population while Shiite Muslims represent 31.2 percent and the Christians represent around 32.4 percent. The rest of the Lebanese include Druze, Jews, Baha’is, Buddhists, Hindus and Jews.[iv]
Under the confessional system, the posts of President, PM and Speaker of the Parliament are reserved respectively for Maronite Catholic Christian, Sunni Muslim and Shiite Muslim.[v] Politics in Lebanon is apparently driven by religious and sectarian interests and moreover the political legitimacy to the sectarian division further deepened the social cleavage and has been a source of constant political factionalism and instability. The vortex of coalition and confessional polity never allowed Lebanon to overcome its political instability which very often results in power vacuum, social calamity and economic disaster. Today PM Miqati is heading the coalition consisting of Future Party of Saad Hariri, Shiite parties of Hezbollah and Amal (Hope) Movement and Progressive Socialist Party of Druze.[vi]
As far as the current political turmoil is concerned, it all began when the government of Miqati decided to form a committee to investigate the August 2020 Beirut Port Blast, killing more than 200 people and leaving around 7000 injured.[vii] The blast was termed by some of the Arab media as the biggest non-nuclear explosion in the history of the world. The blast took place when a container with 2750 tons of highly explosive ammonium nitrate, lying in Beirut port since 2014 exploded. One report estimated that the blast caused the total financial loss of US $ 15 billion to the Lebanese tottering economy.[viii] The Hezbollah and its affiliate Amal Movement came on street in early protesting against the summoning of one of Hezbollah’s members for questioning in the Beirut blast case in early 2021. The protest soon turned violent after the key adversary of Hezbollah, Samir Gaegia’s Christian Lebanese Force Party too came on the streets and demanded investigation into the role of Hezbollah. Subsequently, on October 14 , 2021, the two sides clashed which killed seven people and wounded dozens. The Hezbollah protestors were not only against summoning of its members but they were also demanding the removal of Judge, Tarek Bitar, investigating the August 2020 blast for his allegedly biased attitude.[ix] Hezbollah chief Nasrullah accused Gaegia of pushing Lebanon to the civil war era of 1975-90. The issue further complicated when the military court in Lebanon, investigating October 14 violence, summoned Gaegia to testify but he asked Nasrullah to testify first and then onwards investigation issue has galvanised into a larger Shiite-Christian conflict.
When the country was still reeling under Nasrullah-Samir Gaegia spat over the October clash, the statement of Information Minister, George Kordahi, holding Saudi Arabia responsible for Yemeni plight and calling Houthis’ resistance a defective move added further fuel to the crisis, dragging Gulf Cooperation Council (GCC) countries into an already murky political sphere of the country. In retaliation, Saudi Arabia along with UAE, Kuwait and Bahrain called back their Ambassadors from Lebanon and Saudi Arabia announced the ban of all imports from Lebanon. Kuwait suspended all categories of visa for Lebanese citizens.[x] It is worth mentioning here that along with other GCC countries, Saudi Arabia has many times in the past rescued the Lebanese economy from imminent collapse. Saudi Arabia’s former Ambassador to Lebanon, Abdul-Aziz Khoja emphasised in a recent interview that in last three decades, Saudi Arabia has offered economic assistance to Lebanon worth US $ 72 billion.[xi] He also reminded that Saudi Arabia had extended all economic assistance to Lebanon during Hezbollah-Israel war of 2006 and once Saudi Arabia deposited US $ 100 million in Lebanese Central Bank to boost its economy.
The Arab League appointed its Deputy Secretary Zaki to mediate between Saudi Arabia and Lebanon. Zaki’s remarks that resignation of George Kordahi, Lebanese Information Minister, could help resolving crisis between Lebanon and the GCC’[xii] however heightened the tension instead of deescalating it. Hezbollah accused the Arab League of acting as a Saudi envoy and not as an honest arbitrator. On his part, Saudi Arabia’s Foreign Minister said that there would be no point talking to Lebanon because today the entire Lebanese politics is hijacked by the Hezbollah and its agenda in the region is well-known.[xiii] Some unconfirmed media reports suggest that in case of Information Minister’s continuation in the post, Saudi Arabia and other GCC countries might consider deporting 400,000 Lebanese expatriates, majority of whom are located in Saudi Arabia, thereby adversely impacting the Lebanese economy. More than 10 % of Lebanon’s GDP comes from remittances of Lebanese expatriates as of date.[xiv]
Economy at its Worst
It is not only the political chaos and factionalism that are adversely impacting the country but a decade of economic crises with unemployment, inflation, crumbling tourism industry, severe shortage of basic goods like petrol and bread have pushed the country further to the verge of complete collapse. The World Bank (WB) has termed the current Lebanese economic crisis among top ten crises of the world and third worst crisis in Lebanon since 1850. The GDP in Lebanon is likely to shrink by 9.5% in 2021, which already shrank to 6.3% and 20.3% in 2019 and 2020, respectively. [xv] The crisis has particularly worsened after the Beirut Blast in August 2020 which was followed by the absence of legitimate authority; there was no government to take any major economic measure. In the past year, the poverty has tripled and according to a UNICEF report, three out of ten children go to bed hungry.[xvi] The price of cattle meat alone has risen by 118 % in last three months.[xvii]
The local Lebanese currency (Lira) has lost 90% of its value in last two years[xviii] and today it has crashed to the level of 39,000 Liras to US$ 1. The minimum wage that was once US $ 500 per month has fallen today to US $ 35 per month.[xix] Half of the population of seven million is living below the poverty line and millions of youth are without jobs. In last two years, food price has increased by 628 %[xx] and thousands of people have lost their jobs or part of their salaries.[xxi] Over the months, many have migrated abroad in search of jobs and particularly doctors and paramedical employees have moved to neighbouring Gulf countries in search of better opportunities.
When there was a need to rein the declining economy, government of the day before the election of 2018, raised the salaries of public sectors which had an adverse impact on the economy.[xxii] Due to the hike in the salaries of public sector employees, the government failed to implement major economic reform and due to political instability, global financial institutions refused to offer loans and aid in billions, that they had promised earlier.
One of the experts on the Lebanese economy, Abi Ahmad, opined that the new government is delaying the passing of law on capital flight just to help those who want to evade taxes and deposit money in some foreign banks and that ,in this, both the politicians and capitalists are together and enjoy full state protection.[xxiii] Banking sectors in Lebanon are in a deep crisis and the politician - capitalist nexus is not letting any move towards bank reforms to succeed. Recently, the Governor of the Central Bank was exposed of having invested US $100 million in offshore assets.[xxiv]
Lebanon has suffered many similar economic crises in the past decades, but this time it is an exceptional one and hence requires exceptional economic measures, coupled with comprehensive political and financial reforms. Lebanese banking sector need to regain the trust of the people, address internal and external debt issues and get rid of the past three decades of politics.
What has further worsened the Lebanese economy was the outbreak of COVID-19 , the first case was reported in February 2020, just two weeks before the government had announced that it would default on the payment of US $ 1.2 billion to Eurobonds.[xxv] The growing cases of COVID-19 were followed by constant lockdown. Mass eviction hit the working-class as small businesses got shut and salaries in most sectors dropped by 60 to 80 %.
Recently, PM Miqati held a series of meetings with the WB and International Monitory Fund (IMF) officials seeking an assistance of US $ 10 billion[xxvi] but WB and IMF officials are hesitant to commit anything in absence of political stability. Both the IMF and the WB have not only asked the Lebanese government to stabilise the domestic politics but wants the new government to come up with an economic blueprint for the future if they desire to receive economic aid. After two weeks of his tour to Lebanon, Oliver de Schutter, the UN Special Rapporteur on extreme poverty and human rights said, “This country is failing and the need of the population is not met”. He also added that the Lebanese ruling class live in the world of fantasy and this does not bode well for the future of the country.[xxvii] The current political crisis seems to have ruined all prospects for economic betterment as elections are due in next five months and this government cannot do much in such a short span of time.
Hezbollah and the Current Crisis
Hezbollah, being a Shiite dominated political-cum-militant outfit, since its creation in 1984 is known for its proximity to Iran. Over the years, it has grown as a major political force and confessional political system has helped it further to become a formidable actor amid growing sectarianism of the Lebanese political sphere and inevitable coalition politics. For more than a decade it has become a powerful force which enables it to form governments, facilitate their work or paralyse them, and cause them to resign as well.
It has also been a major source of souring relationship between Lebanon and the GCC countries in general and Saudi Arabia in particular because of its strategic and political empathy with Iran. As far as the present Lebanese crisis is concerned, the role of Hezbollah has been very detrimental. They not only refused to cooperate with the committee investigating the Beirut blast but refused to send its members for questioning. It was Hezbollah which had launched a campaign to remove the judge heading the committee and further clashed with the Christian Lebanese Force Party, which is not only suspecting the role of Hezbollah but demanding the fair trial of the Beirut blast. Boutros Harb, a Maronite and veteran of Lebanese politics criticised Hezbollah for the present chaos and said that Hezbollah is working at the behest of Iran. He further said that the Shiite militia (Hezbollah) wants a complete termination of Lebanese ties with Saudi Arabia, a country which has rescued Lebanese economy from time to time. He also accused the Hezbollah of working to serve the interests of Iran and Syria more rather than of Lebanon and it is Hezbollah’s politics that has brought Saudi Arabia in Lebanon. [xxviii]
Saudi Arabia along with other GCC countries have repeatedly shunned Lebanon because of the growing political influence of Hezbollah in Lebanon and has constantly accused it of acting as Iran’s militias in Yemen and Syria. Saudi Arabia’s Foreign Minister, Prince Faisal Bin Farhan in a statement said that current political dispensation should work to free Lebanon from the dominance of Hezbollah.[xxix] The recent backing of Hezbollah to the Lebanese Information Minister and asking him not to resign as sought by Saudi Arabia has further deepened the divide between the GCC and Lebanon. The total agricultural exports of Lebanon were almost worth US $ 240 million to Saudi Arabia in 2020 and were expected to touch the figure of US $ 500 million by 2022. Out of a total of US $ 3.7 billion of Lebanese exports, US $ 1.2 billion is consumed by the GCC countries alone [xxx]. Undoubtedly the current crisis will adversely impact exports to the GCC countries and the Lebanese economy might suffer further because the GCC countries are likely to put restrictions on their tourists visiting Lebanon as well.
What is happening in Lebanon today is largely a reflection of past politics - mostly determined by sectarianism where every stakeholder more often works to preserve and pursue the exclusive interests of its own sect or political group. Confessional politics has never allowed Lebanon to have a stable or cohesive polity and has scuttled national economic growth. The current turmoil seems to be a culmination of pursuit of exclusive politics by different political outfits and people’s growing disillusionment with the decadent political system, poor governance of previous regimes, Beirut blast, open sectarian clash and blame game among different parties, absence of central authority for a year and worsening economic performance has further added to this crisis. All these have together brought Lebanon to a state where one can see Lebanon as an example of a failing state.
*Dr. Fazzur Rahman Siddiqui, Research Fellow, Indian Council of World Affairs, New Delhi.
Disclaimer: Views expressed are personal.
[v]Diana Darke, Merchant of Syria: A History of Survival( London: Hurst & Company, 2018), p.no.171