Lebanon must turn on Hezbollah to save its economy
Lebanon is in a state of severe economic stress. The price of almost every good has soared beyond the affordability of many citizens. Legions are out of work. Businesses are locked in a dire existential struggle. There is perhaps no more accurate judgment on the state of an economy than the currency market. In this respect, although the Lebanese pound remains officially — fantastically, one might add — pegged at just over 1,500 to the dollar, in truth it takes close to 9,000 pounds to exchange for a dollar. That is an 83 percent devaluation in the market’s faith in the economy.
Many Lebanese, however, are unaware that their national crisis is in fact of Lebanon’s own making. Mostly, they blame an American embargo — one that does not really exist. This misplacement of blame blinds the country to the real cause of its malaise: Hezbollah. Except for sanctions imposed by the US Treasury Department’s anti-terrorism arm, the Office of Foreign Assets Control, on a few Lebanese entities and individuals connected to Hezbollah — the self-proclaimed “Party of God” — there are no financial restrictions on the state of Lebanon or any of great substance against its institutions, public or private.
But, even without being under sanctions, foreign direct investment — usually the engine of economic growth — shies away from Lebanon. Foreign investors are simply unwilling to bring their money into a country that lives in a state of perpetual war, with Hezbollah currently involved in regional entanglements in Syria, Yemen and Iraq, while also threatening to go to war with Israel.
When the Friends of Lebanon group convened an international donor conference in Paris two years ago that came to be known as Cedre, it pledged a rescue package worth $11 billion. The only conditions were that Beirut should get its act together and eradicate corruption and privatize state utilities — especially the highly inefficient Electricite du Liban. It is noteworthy that, even though pledging donors included the US and Saudi Arabia, neither made their contribution contingent on disarming Hezbollah — an organization that both nations classify, for good reason, as a terrorist group. Perhaps they understood that corruption is the lifeblood of Hezbollah, so if Lebanon actually managed to reform away corruption, it would also see off Hassan Nasrallah and his acolytes.
The tragedy is that Lebanon cannot reform. Hezbollah, with its powerful militia, won’t let it. And because reform is out of the question, Lebanon is increasingly dependent on remittances from its vast diaspora. Such transfers are among the highest in the world, but no modern economy can be built on such a broad and deep rentier system: It saps ambition and entrepreneurship. The country desperately needs to change.
But Lebanon cannot change. When the Lebanese economy started on its most recent decline in October, Lebanese citizens took to the streets to demand reform. Hezbollah accused them of being agents of foreign powers. Any hint that Hezbollah was to blame for the economic collapse was suppressed by the party’s thugs, who beat up protesters in the streets. Violence was not the only Hezbollah tool, however. The party also launched a misinformation campaign that depicted Lebanon as a victim of US sanctions, like the group’s allies Syria and Iran.
Next, Hezbollah and its supporters connected every discussion in Lebanon to Israel. Whatever the subject or the problem, they repeated the mantra that the party was preparing not only to launch war on Israel, but to completely destroy Lebanon’s southern neighbor and send Israelis back to “where they came from.” It didn’t matter how tenuous or improbable the connection. Yet, when complaints about the price of bread are answered with “war on Israel,” there is no room in the narrative for macroeconomic plans or support for business.
They have turned the country into an Iranian missile base with which to threaten Israel and blackmail America.
For Hezbollah and the Lebanese oligarchs it controls, the story of Lebanon is one of war and only of war. They have turned the country into an Iranian missile base with which to threaten Israel and blackmail America. And Tehran is unwilling to let go of its investment. It is this that has been the recipe for Lebanon’s unfolding economic disaster.
Hezbollah’s tall tales and delusional plans about destroying Israel create a mixture that distorts reasoning. It is no surprise, then, that many ordinary Lebanese blame America for the country’s ills. But they must stop, for it is only by identifying Hezbollah as the scourge of Lebanon that the Lebanese might begin to find a way out of the morass and begin to pressure the political class to jettison the group. So far, however, that hasn’t happened. So far, Lebanon is blaming everyone else and is unwilling to turn on its enemy within.
- Hussain Abdul-Hussain is the Washington bureau chief of Kuwaiti daily Al-Rai and a former visiting fellow at Chatham House in London. Copyright: Syndication Bureau