Lebanon + 1 more

Managing Lebanon’s Compounding Crises - Middle East Report N°228 | 28 October 2021 [EN/AR]

Format
Analysis
Source
Posted
Originally published
Origin
View original

Attachments

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.

Principal Findings

What’s new? After two years of political paralysis and economic decline, the Lebanese state is falling apart. Service institutions and critical infrastructure are shutting down, while the security sector is strained to the breaking point. Political elites appear unable or unwilling to initiate overdue reforms that would compromise their hold on power.

Why does it matter? Lebanon is rapidly becoming a mosaic of disjointed fiefdoms in which political actors struggle, sometimes violently, to control access to basic resources and security. Extreme poverty is on the rise, threatening a humanitarian crisis and further destabilisation that could wipe out prospects of a quick recovery.

What should be done? External actors should continue to condition most support on reform, while providing humanitarian aid, helping keep critical infrastructure operational and directing assistance to security forces that meet conduct standards. They should try to deter political parties from suppressing protests or obstructing accountability, while pushing them to hold timely 2022 elections.

Executive Summary

Two years into its disastrous economic crisis, Lebanon is falling apart. A deadly confrontation in mid-October over the August 2020 Beirut port blast investigation underscored the growing risk of sectarian violence. Political leaders are playing for time rather than facing up to the necessity of reform. State institutions are eroding, as the local currency’s devaluation has gutted budgets and made employees’ salaries worth less and less. The biggest danger lies in the deterioration of the security forces, which are stretched ever thinner policing unrest, while no longer earning living wages. The vacuum left by institutions’ decay is likely to be filled by political parties and armed rackets, leaving a chaotic patchwork of territorial control. External actors should provide direct aid to the security services, select segments of the private sector and the population at large to mitigate the most acute suffering and keep the peace until the political elite change their cost-benefit calculus. In the short term, they should push Lebanese authorities to hold the 2022 elections on time, as no real change can occur with polls just ahead.

Ever since the economic meltdown’s extent started to become apparent in late 2019, Lebanese politicians have put off making reforms that could threaten their hold on power. They are loath to let go of a political system that has allowed them, since the end of the country’s civil war in 1990, to divvy up political and economic spoils. Ostensibly, they did so in pursuit of the interest of the sectarian communities they purport to represent, but in reality these leaders were mostly serving themselves – they have amassed considerable wealth in the post-war era. Along with, and often in the place of, political or economic agendas, the leaders have used a mixture of sectarian identity politics and patronage to secure support. In the process, they neglected economic development and helped ruin the country’s finances. Now, with disaster at hand, the politicians have looked primarily to defend their shared prerogatives rather than to mend their ways. That motive, rather than substantive disagreement over what to do, explains why the country had only a caretaker government for most of the crisis’s duration.

The caretaker government served from August 2020, when Prime Minister Hassan Diab resigned after the port catastrophe, until 10 September 2021. On that date, Najib Mikati (who has been premier twice before) finally put together a cabinet that President Michel Aoun would accept. Meanwhile, international donors, distrustful of the Lebanese political elite, which has mismanaged past aid packages, withheld the bailout that the economy so badly needs.

Yet, even with Mikati and a new government finally in place, the odds for swift progress toward reforms appear minimal. On one hand, a tight electoral calendar, with parliamentary, municipal and presidential votes all due in 2022, makes it extremely unlikely that the government can take decisions of significant consequence before late in that year. Furthermore, even were the government to enact reforms as a formal matter, it appears unlikely that the ruling elite would follow through with the changes, which would be necessary to save the economy but also liable to undermine their grip on power. Most likely, they will keep kicking the can down the road, while more citizens slip into penury and state institutions further erode.

The security forces are the most pressing concern. Soldiers and police officers are now receiving far too little pay to provide for themselves, let alone their families. Moonlighting and desertion are set to become more widespread, while rising social tensions leave the security forces and in particular the army perilously overburdened. In the last two years, they have stepped in to deal with the Beirut port explosion and the mid-2021 wildfires; to monitor mass protests; to suppress riots and prevent confrontations over subsidised goods; to interdict the smuggling and hoarding of fuel; to confront heavily armed drug traffickers; and to contain clashes between political factions. Some units may be close to breaking down.

As the state and its organs weaken, political parties and other groups are gradually taking their place.

As the state and its organs weaken, political parties and other groups are gradually taking their place. Control over dwindling public resources is an ever-more powerful tool for keeping an increasingly destitute population in line. By the same token, the decline of public safety will likely enhance the political sway of actors seen as capable of providing it locally. Hizbollah is positioned to wield particular influence as the state declines due to its exceptional financial, military and organisational capacity, including the ability to maintain autonomous external resource streams. Unfortunately, it has used this influence to undermine what is left of the rule of law in Lebanon, throwing its weight behind resistance to the investigation into the port blast led by Judge Tareq Bitar. On 14 October, shooting broke out when supporters of Hizbollah and Amal, an allied Shiite party, marched to the Palace of Justice, located in a Christian neighbourhood, to demand that Judge Bitar be replaced. Seven people, mostly Hizbollah supporters, died in the exchange.

External actors have only a few ways of making a positive difference. Sanctions targeted at reform-resistant politicians, which many Lebanese activists ask for, appear insufficient to trigger major changes that would threaten the elite’s hold on power. They might, however, be able to extract tactical concessions that could widen cracks in the edifice. For instance, outside pressure could help deter politicians from repressing protests or obstructing accountability measures such as the investigation into the port explosion. One near-term objective for external actors should be to prevent and penalise attempts by parties seeking to delay or suspend the 2022 elections. Mikati has described his agenda as charting a pathway to reform between now and the parliamentary elections due in the first half of 2022, while leaving enforcement to the next government formed after these polls. Substantial reform measures will thus not kick in before mid-2022, and most likely considerably later. Significant external financial support may thus be out of reach for Beirut for another year or more.

While conditioning substantial non-humanitarian support on far-reaching reform remains the right strategy for donors, they should be prepared to shift their emphasis somewhat. On one hand, without reform, assistance is unlikely to have sustainable impact, and instead will feed the same corrupt networks that brought about the crisis. Furthermore, no meaningful economic recovery will be possible without an International Monetary Fund stabilisation program, which will not go forward absent reform. On the other hand, external actors should prepare to help Lebanon cope with a progressive erosion of state capacity that will precipitate a severe humanitarian crisis and serious street disturbances. Keeping key infrastructure functional should be seen as a form of humanitarian aid, while direct assistance to the security forces so long as they do not engage in abusive conduct will be needed to keep the country reasonably safe. The objective for external help during this difficult period should be to limit the population’s suffering and the damage done by the state’s dereliction until the real work of reform can begin.