Growing uncertainty over future of Lebanon after government resigns following deadly blast
Trey Yingst reports from Beirut on the fallout from the deadly explosion.
A quiet debate has erupted inside the United States bureaucracy in the aftermath of the August 4 explosion at the Beirut Port that reportedly killed more than 200, injured at least 6,000, and left many more homeless. Nearly everyone in the U.S. government wants to help this tiny and embattled country on the Mediterranean Sea. But exactly how to help is where opinions diverge.
Lebanon’s latest crisis, resulting from the bizarre detonation of a reported 2,750 metric tons of ammonium nitrate that sat unclaimed and uncontrolled for six years in a warehouse at the Beirut Port, is actually just one of several compounding crises that must be defused.
First, Lebanon is now descending into a deep and disastrous financial crisis. A new report issued by Foundation for Defense of Democracies, authored by renowned economist James G. Rickards, reveals that Lebanon is a staggering $93 billion in debt. This includes $67 billion in bank debts, $22 billion in debts accrued by the Central Bank, and another $4 billion from Eurobonds that the country recently failed to repay. The country’s financial collapse is the result of greed, corruption and gross mismanagement by the country’s political elite.
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The financial collapse of Lebanon is made worse by global financial challenges associated with the ongoing COVID-19 crisis, which has all but dried up remittances from Lebanese expatriates working in the Arab Gulf state, Africa or Latin America. Lebanon has little to no fresh currency coming in, which will make the purchase of imports (for food and other products) that much more difficult.
As U.S. officials grapple with possible solutions to Lebanon’s financial collapse, they will be hamstrung. Sending funds comes with great risk. The Iran-backed terrorist group Hezbollah has its tentacles everywhere. If fact, the Beirut Port (where the recent explosion took place) is long suspected to be exploited by Hezbollah for illicit trade and smuggling. It remains unclear whether the explosion was connected to Hezbollah weaponry in some way.
Regardless of whether Hezbollah was directly implicated in the explosion, we know it is implicated in the country’s corruption and kleptocracy. Two banks over the last decade have been shuttered for harboring Hezbollah cash. And based on evidence cited by the U.S. Treasury, many more banks could likely meet a similar fate.
In the meantime, Hezbollah continues to stockpile weapons in preparation for a war with Israel. Estimates suggest that the group has an estimated 150,000 rockets stored throughout the country – often in a way that poses great risk to the population often in high-density population areas.
More recently, Israeli officials have warned that Hezbollah has been hoarding precision-guided munitions (PGMs), which the Israelis call “game changers” that they have vowed to destroy. These PGMs can evade Israel’s high-tech missile defense and strike targets within a few yards of where they were intended to hit. The Israel Defense Force has thus issued clear warnings that a pre-emptive war is increasingly possible.
Thus, for the United States and other potential donor states, a financial rescue for Lebanon comes with even greater risk. Why would anyone want to invest funds in a country that could be destroyed in the coming months in a war with Hezbollah?
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Currently, French President Emmanuel Macron is leading an effort to rally the international community to help Lebanon. He has thus far managed to scrape together pledges for an estimated $295 million. This sum is relatively small and clearly reflects the international community’s reluctance to pour money unconditionally into a country with a terrorism problem whose political class has run the country into the ground, with no clear plan for reform.
Macron, to be fair, is calling for the Lebanese to make some reforms. However, he is asking the corrupt politicians who ruined the country to enact those reforms through the formation of a “national unity government,” which would include Hezbollah. The likelihood of a positive outcome from the continuity of this Hezbollah-led order is zero.
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If anything, the Lebanese ruling elite is likely to leverage the international recognition it would receive through this effort to perpetuate its rule and continue to run the system that has run Lebanon to the ground. In fact, Macron is calling on the US to “reinvest” in this Hezbollah-led order and to rethink U.S. sanctions policy. This is not in the U.S. interest.
It is important for the U.S. not to fall into the trap laid by Macron and the Lebanese elite. What began as a discussion about providing discrete humanitarian aid has recently begun to slip. Officials are now talking about more ambitious reconstruction efforts and broader development aid. A recent U.S. State Department delegation to Lebanon reportedly made an offer to rebuild the Beirut port. This is a red flag.
U.S. policy needs a clear direction. It certainly makes sense to call for a new government responsive to the people on the streets who are justifiably demanding the departure of the entire political class. Moreover, it makes sense to impose sanctions on Hezbollah and its allies, not to mention the corrupt cronies of all sects and political affiliations that have driven the country into the ground.
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But we cannot do so while pumping money into the so-called “state institutions” of Lebanon. Those institutions are part of the problem. Even the Lebanese Armed Forces, which is funded by the U.S. taxpayer, has been beating up protesters in the street.
It’s time for Uncle Sam to draw the line. The French initiative is not in the American interest. Nor will any other effort to send cash to Lebanon if what comes next is a national unity government of Hezbollah and the corrupt sectarian barons.
Tony Badran is a research fellow at the Foundation for Defense of Democracies focusing on Lebanon and the Levant. Follow him on Twitter @acrossthebay
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