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1. False Dawn: Lebanon’s Economic Crisis Amidst Improved Saudi-Iranian Relations

Author:
David Wood
Publication Date:
03-2024
Content Type:
Journal Article
Journal:
Brown Journal of World Affairs
Institution:
Brown Journal of World Affairs
Abstract:
On 17 October 2019, furious protests erupted across Lebanon as citizens came to a shocking realization: the country’s leaders had destroyed the economy. Decades of corruption and mismanagement had emptied the state’s coffers, trig- gering a domestic banking collapse and frittering away many Lebanese residents’ life savings. Now, almost five years later, the situation has only grown worse. The Lebanese lira (LBP) has been devalued to the point of irrelevance, crashing from 1,507.5 LBP for 1 USD to over 140,000 LBP in March 2023. House- holds give up essentials like health insurance to pay for diesel power generators and solar panels, as public electricity provisions—along with many other key state services—barely function.1 Meanwhile, the country’s leaders stubbornly resist implementing much-needed economic reforms, blaming the economic crisis on a wide range of factors, from Syrian refugees to general instability in the Middle East. A regularly proffered excuse emphasizes the role of competition between Iran and Saudi Arabia, whose rivalry has periodically played out on Lebanese soil. This theory argues that Lebanon is a “penetrated society,” inextricably tied to and paralyzed by geopolitical competition, including the Saudi–Iranian con- frontation.2 Thus, Lebanese leaders cannot resolve their disputes until these two regional heavyweights, amongst other foreign powers, reconcile their conflicting interests in Lebanon. Regional competition overlays a domestic political structure already prone to deadlock, which rigidly apportions power between Lebanon’s frequently feuding sectarian communities. Accordingly, various Lebanese politicians hoped that improved Iranian-Saudi relations—facilitated in March 2023 by Chinese mediation—would lead to a breakthrough in their ability to tackle Lebanon’s economic meltdown. Yet, this optimistic reading overestimates the extent of Tehran and Riyadh’s cautious détente, which is unlikely to translate into constructive engagement in Lebanon any time soon. It also downplays the true obstacle to Lebanon’s economic reform process: corruption in the country’s own political and financial elite.
Topic:
Corruption, Diplomacy, Economic Crisis, and Regional Politics
Political Geography:
Iran, Middle East, Saudi Arabia, and Lebanon

2. Justice, the Beirut Blast, and Lebanon's Continued Crisis

Author:
Fadi Nicholas Nassar and Ronnie Chatah
Publication Date:
02-2023
Content Type:
Video
Institution:
Middle East Institute (MEI)
Abstract:
MEI's U.S.-Lebanon Fellow Fadi Nicholas Nassar speaks to Ronnie Chatah - host of the Beirut Banyan and founder of WalkBeirut - about justice in the wake of the Beirut Blast. Why have family members of the blast's victims recently been arrested, and where does accountability lie as Lebanon continues to slip into further crisis?
Topic:
Accountability, Justice, Disaster Management, Economic Crisis, and Beirut Blast
Political Geography:
Middle East and Lebanon

3. Lebanon in Crisis

Author:
Randa Slim and Edward M. Gabriel
Publication Date:
03-2022
Content Type:
Video
Institution:
Middle East Institute (MEI)
Abstract:
Randa Slim and Amb. Edward Gabriel discuss the daunting trifecta of economic, financial, and political crises Lebanon currently faces and what they anticipate for the country's future.
Topic:
Financial Crisis, Political Crisis, and Economic Crisis
Political Geography:
Middle East and Lebanon

4. Fixing the Economy and Public Service Provision in Lebanon

Author:
Amal Bourhrous
Publication Date:
12-2021
Content Type:
Policy Brief
Institution:
Stockholm International Peace Research Institute (SIPRI)
Abstract:
The limited accountability and weak institutions of Lebanon’s sectarian power-sharing system have had a severe impact on the country’s economy and the state’s ability to provide basic public services. Protesters have repeatedly voiced discontent with a political system that facilitates corruption and allows self-serving political and sectarian elites to capture public resources and escape accountability. Many have called for the sectarian power-sharing system to be transcended. Although a comprehensive reform of the political system remains a remote prospect, there is an urgent need to address the grievances of Lebanese people within the system. Based on interviews with current and former government-level officials and experts in Lebanon, this policy brief presents recommendations on what can be done within the existing system to fix the economy and public service provision.
Topic:
Governance, Public Service, and Economic Crisis
Political Geography:
Middle East and Lebanon

5. Managing Lebanon’s Compounding Crises

Author:
International Crisis Group
Publication Date:
10-2021
Content Type:
Special Report
Institution:
International Crisis Group
Abstract:
Lebanon is suffering economic meltdown while its politicians dither. Reform – and fiscal relief – is unlikely before 2022 elections. While pushing for timely polls, international partners should send humanitarian assistance to ease the public’s pain, keep key infrastructure running and avert security breakdowns.
Topic:
Economics, Infrastructure, Humanitarian Crisis, and Economic Crisis
Political Geography:
Middle East and Lebanon

6. Hizballah’s Gain, Lebanon’s Pain

Author:
Joel Parker and Sarah Cahn
Publication Date:
09-2021
Content Type:
Working Paper
Institution:
Moshe Dayan Center for Middle Eastern and African Studies
Abstract:
On August 6, Hizballah fired 20 rockets towards the Shebaa Farms area of the Golan Heights, highlighting the growing political instability in Lebanon. Hizballah's behavior should be viewed in light of the ongoing financial and political crisis that has affected every aspect of Lebanese life since late 2019 and has pushed hundreds of thousands of people into poverty. Hizballah may not be the primary or sole cause of the crisis, but it is important to understand how it may have contributed indirectly to it, how it may benefit from it, and why it may not have an interest in fully resolving it. Hanin Ghaddar, the Friedmann Fellow at the Washington Institute for Near East Policy (WINEP), argues that despite the collapsing economy in Lebanon, Hizballah has been able to expand its array of social-welfare institutions to deepen their Shiʿi constituency's dependence and even expand the reach of these programs by providing support to a growing number of Lebanese who are struggling to survive. Hizballah also receives funding from Iran and through its commercial activities around the world, so one might ask how much Hizballah really needs the Lebanese state. Lina Khatib, a scholar at Chatham House and SOAS University of London, contends that Hizballah benefits from its hybrid role as a part of the state and, at the same time, free to operate outside the official channels of government and public scrutiny. Michael Young, senior editor at the Carnegie Middle East Center in Beirut, however, has argued that the group might indeed benefit from a collapse of the state, which will allow Hizballah to continue to fill a growing political, economic, and social power vacuum.
Topic:
Foreign Policy, Hezbollah, Regional Power, and Economic Crisis
Political Geography:
Iran, Middle East, and Lebanon

7. Educating Refugees in Lebanon

Author:
Wissam Fakih
Publication Date:
06-2021
Content Type:
Special Report
Institution:
Center for Contemporary Arab Studies (CCAS)
Abstract:
MAAS student Wissam Fakih explores how Lebanon’s triple crises—economic collapse, the port explosion, and the pandemic—have impacted the education of thousands of Syrian refugee children living in the country.
Topic:
Education, Children, Refugees, Crisis Management, and Economic Crisis
Political Geography:
Middle East, Lebanon, and Syria

8. Why the U.S. Should Help Prevent Lebanon’s Collapse

Author:
Imad K. Harb
Publication Date:
05-2021
Content Type:
Journal Article
Journal:
American Diplomacy
Institution:
American Diplomacy
Abstract:
Lebanon today is experiencing wrenching convulsions that threaten its complete disintegration. It may be difficult, or unwise, for the Biden Administration to wade into Lebanon’s waters. But if the United States wants to preserve its strategic posture along the eastern Mediterranean––which is essential for its influence in the entire Levant––it cannot afford not to be involved in helping the country.
Topic:
Politics, Foreign Aid, International Community, and Economic Crisis
Political Geography:
Middle East, Lebanon, and United States of America

9. Iraq and Lebanon’s tortuous paths to reform

Author:
Nancy Ezzeddine
Publication Date:
12-2020
Content Type:
Special Report
Institution:
Clingendael Netherlands Institute of International Relations
Abstract:
The recent protests in Iraq and Lebanon are driven by the effects of inadequate governance, which itself is a result of years of corruption, nepotism, and the appropriation of public authority and resources for sectarian purposes and self-enrichment. The governance model of both countries – sectarian quasi-democracy – is increasingly proving to be a long-term dead end. Both countries stare into the abyss of public bankruptcy, crumbling social services, growing poverty levels, and the lingering threat of renewed violence. Yet, the Lebanese and Iraqi political elites are stubbornly refusing to make more than token concessions to the protesters’ demands. The reform protesters seek are ambitious due to the many mechanisms that have entrenched elite capture of public authority and budgets in both countries over the past decades. These include, in particular: (1) the deep institutionalization of consociationalism that prevents more radical reform; (2) the pervasiveness of public/private arrangements that political elites use to dominate socioeconomic interactions to their benefits; and (3) the steady courting by many domestic political parties of foreign alliances that sustain the sectarian status quo. Notwithstanding the roadblocks to reform thrown up by these three mechanisms, this paper argues that today’s mix of political and economic crises offers opportunities bring about change. This is because these crises starkly expose the deep failure and unsustainability of current governance and development mechanisms in Lebanon and Iraq. Faced with resilient, stick systems that feature many veto players, reform is inevitably bound to be a gradual, long-term process that slowly and painfully strengthens and changes political structures. Key ingredients of such a path are the capacity of civil society structures to influence and guide decision making, the extent to which the international community is ready to challenge the status quo via conditions and incentives for genuine reform, and the ability to protestors to keep pressing for and prioritizing domestic agendas despite geopolitical tensions.
Topic:
Civil Society, Corruption, Reform, Alliance, Political Crisis, and Economic Crisis
Political Geography:
Iraq, Middle East, and Lebanon

10. Deposits Made “Sacred”: The Dangerous Red Line of Lebanon’s Elites

Author:
Mounir Mahmalat
Publication Date:
04-2020
Content Type:
Working Paper
Institution:
The John F. Kennedy School of Government at Harvard University
Abstract:
Facing the ashes of an economic model based on sectarianism and cronyism, Lebanon currently endures a perfect storm of overlapping financial, economic, and political crises. Since its inauguration on January 31, 2020, the technocratic government of Prime Minister Hassan Diab, aided by international advisors, elaborated an “economic rescue plan” to explore options for recovery. Leaked as a preliminary version in early April, the plan offers a sobering analysis of Lebanon’s economic realities. The plan exposes Lebanon’s present-day power struggle between traditional communal elites and a reformist protest movement. While some assumptions and projections are questionable or left unexplained, in conclusion, the plan depicts as inevitable a contribution of large deposits in the form of “bail-in’s” to cover losses only in the banking sector twice as large as the national economy. In such a scenario, a part of the largest deposits could be transformed into bank equity or placed into a dedicated fund to be replenished with reclaimed “stolen funds.” While some assumptions and projections are questionable or left unexplained, the plan makes visible the power struggle between an elite trying to preserve its interests in the status quo and a reformist protest movement. As a major conclusion, the plan depicts as inevitable a contribution of large deposits in the form of “bail-in’s” to cover losses only in the banking sector twice as large as the national economy. In such a scenario, a part of the largest deposits could be transformed into bank equity or placed into a dedicated fund to be replenished with reclaimed “stolen funds.” Communal elites and party leaders didn’t spare strong words to denounce that plan. While Nabieh Berri unceremoniously declared deposits as “sacred”, former Prime Minister Saad Hariri prophesied “economic suicide” when deposits would be used to cover banks’ losses (assumed that much more could be murdered in the economy). Other leaders from all political parties followed suit, including Hezbollah and the Progressive Socialist Party. Liquidity injections into the banking system in a “bail-out” scenario should leave deposits untouched and be financed largely by privatization of state assets. Despite the high stakes at play for politicians’ bank accounts and the legal complexity of bail-ins, this unusual unity is not trivial to explain. For sure, by accepting any cut on deposits, elites would admit political defeat and declare a 30-year legacy of economic policies as a miserable failure.
Topic:
Reform, Economy, Elites, and Economic Crisis
Political Geography:
Middle East and Lebanon