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The United States Can Prevent Lebanon’s Collapse

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Shortly before the December holidays, Senators Bob Menendez (D-NJ) and Jim Risch (R-NJ), chair and ranking member of the Senate Foreign Relations Committee, delivered a straightforward message to Lebanon’s leaders: make progress or face sanctions.

After making multiple trips to the country last year, including one with congressional staff, it is clear that the United States continues to have a vital leadership role to play in not only helping Lebanon recover from this historic crisis, but also rebuilding its foundation to become a country with transparent and reform-oriented political and financial leadership. There is an overwhelming consensus in the policymaking community, reflected in the senators’ letter and a policy brief authored by twenty leading U.S.-Lebanon policy experts, that there needs to be a new international framework to incentivize better governance in Lebanon. The United States needs to lead such an effort now because Lebanon is on the precipice of failure.

The priority for Lebanon’s elected leaders and political parties is the election of a reform-oriented and corruption-free president committed to addressing the needs of the people. This needs to be followed with the timely formation of an effective government. Lebanon has been without a president since Halloween. The United States needs to use all tools at its disposal, as the Senate letter calls for, to pressure Lebanon’s leaders to elect a president and form a government that can usher in the reforms the country so desperately needs. There is no time to waste.

The suffering of the Lebanese people is a tragic consequence of the corruption of Lebanon’s financial and political elite who benefitted from a Ponzi Scheme that has rendered the country’s currency valueless and triggered a crisis in the banking sector. Meanwhile, Lebanon’s elected leaders have delayed implementing reforms outlined in the International Monetary Fund (IMF) staff-level agreement, which are necessary for unlocking IMF support to rehabilitate the country’s economy. The United States has made it clear that the IMF package is essential for both Lebanon’s socioeconomic recovery and future support from the United States and international community. As a result of this crisis, 80 percent of Lebanon’s population of 6.5 million residents and refugees live below the poverty level. The country’s education and healthcare sectors are being neglected at all levels. The largest university in Lebanon, Lebanese University, doesn’t even have paper to administer exams. As Lebanon drifts into failed state status there is a strong chance the United States will be dragged further into a protracted and increasingly difficult task to protect U.S. interests in the region and counter increasing encroachment from Russia and Iran.

Electricity reform is an area where the United States can show leadership that concretely affects millions of Lebanese. Right now, the Lebanese people are only receiving about one to two hours of electricity per day due to corruption and incompetence in the electricity sector. Without this vital source of power, economic stability will be impossible, and the lives of the Lebanese will deteriorate.

The Levantine Energy Deal, which would see Egyptian gas and Jordanian electricity imported to Lebanon, is a major solution promoted by the United States. Lebanon has an equally important role to play as the Ministry of Energy needs to recruit a politically-neutral Electricity Regulatory Authority (ERA) and propose a sustainable cost recovery program as necessary conditions for World Bank support for the project. This is all the more important because Iran has approached Lebanon with an offer of a “gift” of fuel for Lebanese power plants to avoid the complication of sanctions.

Support for the Lebanese Armed Forces (LAF) continues to be one of the strongest bipartisan pillars of support for the United States in the Middle East. Given the depleting salaries of the soldiers due to the country’s economic crisis, the one-time livelihood support the United States is providing to military families in the LAF and Internal Security Forces (ISF) in Lebanon is crucial and comes hand in hand with encouraging U.S. allies to continue their support. Consistent support for the LAF is essential if Lebanon is to control its own security and protect its territorial integrity against both its own enemies and those of the United States.

The United States has recently shown its indispensable leadership in facilitating the maritime boundary agreement between Lebanon and Israel, thus avoiding the threat of another war. The United States will need to show the same determination in leading the international community, especially its partners in Europe and the Gulf, in pressuring Lebanon’s elected leaders to elect a president who is clean, capable, and willing to institute needed reforms that address Lebanon’s needs. If the United States can prioritize the Lebanon response now, it can avoid further deterioration which will only result in a more-costly price to be paid later.

Edward M. Gabriel is president of the American Task Force on Lebanon, a leadership organization of Americans of Lebanese descent, and former U.S. Ambassador to Morocco.

Image: Shutterstock via the National Interest.

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The Disaster in Lebanon and Challenge for the Biden Administration

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Crosspost from American Ambassadors Live!

 

Political History 1989-2019

The disastrous state of affairs in Lebanon is mainly a result of failed governance for the past several decades. The 1989 Taif Agreement that defined peace after Lebanon’s civil war created a balancing act among various warlords and political figures who divvied up the government by sectarian affiliation. Since then, government institutions have been weakened, public employment has become a function of constituent services, contracts and social services have been doled out without any transparent process and necessary reforms have been ignored.

Humanitarian consequences of this mismanagement are widespread. Social services are lacking. Public schools, health and social services, a pension system and labor laws are inadequate; and there is little protection for civil and human rights and environmental protection. In addition, there are more than 1 million Palestinian, Syrian and other refugees in the country, exerting extreme pressure on the country’s socioeconomic requirements and infrastructure.

Infrastructure investment has been ignored, and 80% of hospitals and 70% of schools are run by the private sector. The economy has been running disproportionately on remittances from Lebanese emigres and tourism. The banking system, which was highly praised until a year ago, attracted hard currency and euro-bonds by offering high interest rates in order to feed a deficit-spending government, only to default when the government failed to honor the bonds due.

In October 2019, the government blundered by imposing a tax on the popular, free telecom app, WhatsApp, to pay for increasing public deficits of its own making. The people had enough; they were outraged. They lost what remaining faith they had in the government, and on October 17 demonstrations erupted across the country, across all sects, generations and political persuasions.

The people were upset as they experienced an increasingly poorer quality of life, especially after the Lebanese lira rapidly declined in value due to the lack of stable reserves to support the currency. In 2019, Lebanon had the third-highest debt-to-GDP ratio in the world, and its bonds are now “junk” on the international markets. It imports 80% of what it consumes. The country is broke, with little support from expatriates and allies and a ruling class that shows no willingness to reform.

In 2018, the international donor community, in an effort called the CEDRE program, agreed to support Lebanon once it undertook systematic reforms. These have been neither instituted nor implemented, leaving $11 billion in international aid on the table. Subsidies on food, fuel and medicine are set to stop in December due to a lack of government reserves. Inflation is well over 200% for food items, over-the-counter medicines are almost non-existent due to hoarding and the middle class is rapidly disappearing. Banking-sector capital controls make it almost impossible for depositors to have access to their funds, and the failing exchange rate means that people who withdraw their lira face an immediate decline in purchasing power.

The demonstrations were remarkable in their intensity and breadth; and it was only a matter of time before their concerns had to be addressed. The first casualty was the then- (and now again) Prime Minister Saad Hariri, who resigned, along with several of his ministers and Members of Parliament.

And If That Isn’t Enough

Lebanon took another blow when the pandemic hit and its hospitals did not have medical supplies readily available to address the COVID-19 crisis. Then, on August 4, at the Port of Beirut, one of the largest non-nuclear explosions ever resulted in almost 200 deaths; close to 6,000 injured; 300,000 people displaced; billions of dollars of damage to structures, small businesses and residences; and devastation to the port and adjacent storage and logistics areas.

For the first time since the Spanish flu in the early 20th century, people are going hungry. Lebanese who can emigrate do. Even international aid flows are obstructed as a result of historic and systemic corruption by customs officials.

Since the fall of the Hariri government in 2019, two appointed prime ministers have failed to name new governments, stymied by sectarian political leaders. Now Prime Minister Hariri is back, promising to bring the necessary reforms through a government of experts willing to implement the so-called French Plan that ties relief to economic reforms. His chances of success will become clear in the coming weeks. Hezbollah, conducting Iran-directed interventions in Syria, Yemen and beyond, does not appear interested in strengthening the state of Lebanon if it does not serve Iran’s interests and has shown no intention of stepping aside for a technically competent government.

U.S. Interests in Lebanon

America has significant strategic interests in supporting a strong and prosperous Lebanon and cannot afford to have Lebanon become a failed state. These interests include:

  • Countering the influence of Iran and its proxy Hezbollah, as well as Russian and Chinese regional encroachment

  • Maintaining security across the Lebanese-Israeli border to avoid another war

  • Maintaining successful counterterrorism and military cooperation with the Lebanese Armed Forces (LAF)

  • Sustaining a country hosting more than 1 million registered Syrian and Palestinian refugees, which is the highest number of refugees per capita in the world

  • Preventing a failed state in the region, which would generate new flows of refugees (Syrians and Lebanese) and new havens for ISIS and al-Qaeda, while further empowering Hezbollah

  • Preserving Lebanon’s unique example as an inclusive society of diverse peoples and cultures

A Roadmap for the Biden Administration

The situation in Lebanon requires a comprehensive and deft U.S. policy. First and foremost, it must be a Lebanon policy, rather than the result of an Israel or Iran policy with side implications that can adversely affect Lebanon.

One criticism of the Trump administration is that it often rejected policies of past administrations. Whether it was Joint Comprehensive Plan of Action (JCPOA) with Iran or the Affordable Care Act, the Trump administration unwisely rejected some Obama-era policies outright, rather than building upon them. Likewise, there are Trump administration policies that are working or could be improved. This applies to U.S. policies toward Lebanon.

Importantly, the U.S. must take up the leadership mantle again and not cede its role in Lebanon or the Middle East to countries that would rather undermine the U.S. Rather, it must lead a coalition of like-minded countries in a common policy towards Lebanon and the wider Middle East region.

The Biden administration should implement four baskets of policies:

  • Tough diplomacy, conditioning assistance based on specific implementation of reforms

  • A commitment to the people of Lebanon to support their short- and longer-term needs with regard to humanitarian, social, political and economic needs, and their civil and human rights

  • Support for the Lebanese Armed Forces, which guards Lebanon’s security

  • Addressing regional issues that affect Lebanon: instability in Syria, Israeli security, Russian interference and the destabilizing influence of Iran in Lebanon

Tough Diplomacy that Supports Serious Reforms

The International Monetary Fund (IMF), France and the CEDRE conference have proposed reforms that, if enacted, could provide more than $20 billion to save the Lebanese government from default. Such assistance is dependent on a reformist, independent government established with the support of Lebanon’s citizens and other stakeholders.

In particular, the proposed reforms address capital controls on the currency, a forensic audit of the Central Bank, restructuring the banking sector, budget deficit reduction, tax and civil service reforms, laws addressing transparent privatization policies, electricity reform and a social safety net for a country with a poverty rate exceeding 50% and likely to rise.

The Biden administration should encourage the government and its stakeholders to articulate a comprehensive and shared vision for moving Lebanon forward, and it should work with the IMF and its allies on a restructuring plan that enables Lebanon to achieve credible and lasting reforms, thus enhancing prospective foreign and domestic investments. One proposal under consideration to stabilize the lira is the establishment of an independent currency board.

The U.S. and its partners should utilize existing international mechanisms to help Lebanon identify, impound and repatriate stolen or corruptly accumulated funds, and it should lead an orchestrated international meeting of friends and partners to show support for financial restructuring based on Lebanon’s resolve to undertake specific reforms.

For its part, Lebanon needs to make a serious effort to facilitate a discussion among all stakeholders, including civil society, unions, banks, businesses and the professional class, as well as political leaders, to draft a comprehensive plan for the country. Parliament must signal its commitment to fast-track legislation to support necessary reforms.

The Biden administration should also closely examine the effectiveness of sanctions imposed by the Trump administration under the Magnitsky Act and anti-terrorism laws. The threat of sanctions seemed to have distanced some parties from their alliance with Hezbollah. It is believed that sanctions on Hezbollah and its sectarian allies in government have pushed them to allow the negotiations to proceed on the Israeli-Lebanon maritime border. Sanctions have also raised the hope of the Lebanese people that they are not alone in their fight against corrupt officials.

It should be cautioned however that while sanctions may be useful in curbing the illegal actions of Hezbollah and their political influence, sanctions should focus on human rights abusers, corrupt individuals, and terrorist activity, rather than a particular group of people, political party, religion, or based on political motives. It is important for the US to avoid the impression of pursuing a political objective.

Contrary to some commentaries, the Biden administration should express a firm commitment to prosecute individuals who break international laws pertaining to corruption, terrorism or human rights.

A Commitment to the Citizens of Lebanon

While the carrot-and-stick approach of tough U.S. diplomatic actions has been called an effective tool of the Trump administration and its allies, it is incomplete. If the Lebanese people are asked to suffer through tough diplomatic actions, there should be a commensurate commitment to help them through this difficult period. The Trump administration was influenced by anti-Hezbollah hawks in Congress and administration officials who believed that support to Lebanon would end up in the hands of Hezbollah. The facts do not support this concern.

There is an immediate need for humanitarian assistance. The Trump administration has provided $18 million in “previously” committed aid to Lebanon, and it promised another $30 million in food aid through the World Food Program.

Lebanese Americans have contributed more to Lebanon than the U.S. government has, with free shipments of medicine, medical supplies and reconstruction materials now exceeding $30 million through trusted Lebanese and U.S. NGOs. The U.S. is missing an opportunity by not more visibly participating in helping the Lebanese people during this tragic time.

Unfortunately, the need will continue for the foreseeable future, and it must be a funding priority of the Biden administration to support food security measures and vital medicines, medical supplies and recovery help following the August 4th explosion.

In the longer term, the future of Lebanon and its bilateral relationship rests on the U.S.’s ability to engage the citizens of Lebanon. Lebanese are Western-focused, with a strong desire for individual liberty, the rule of law and freedom of expression.

President-elect Joe Biden has made it a priority to lead internationally by emphasizing human rights. The Biden administration should support tomorrow’s leaders and civil society programs, including efforts that strengthen civil society, elections, political party development, human and civil rights, judicial reform, small business development and capacity building for communities and organizations.

U.S.-style institutions of higher education, including the American University of Beirut and Lebanese American University, should be strengthened. Scholarships should incentivize recent graduates to remain in Lebanon to rebuild their country.

Considering Lebanon’s extremely high poverty rate, the U.S. should lead and catalyze international efforts to fund comprehensive and effective social safety nets for all Lebanese people and continue to lead in supporting Syrian refugees until they can return in a voluntary, safe and dignified manner.

If the stalemate continues in the formation of an independent reform government, the international community should consider adopting the French proposal that entails shifting international support from government reforms to immediate humanitarian efforts and medium-term support to the people of Lebanon and their civil society institutions.

Support the Lebanese Armed Forces (LAF)

The LAF is one of the best-trained fighting forces in the Middle East, having defeated pockets of ISIS and al-Qaeda, maintained peace on its southern border and protected the freedom of Lebanese citizens to publicly express their concerns.

As a means of strengthening Lebanon’s sovereign responsibilities, appropriations for the LAF should be commensurate with the need to provide, maintain and sustain equipment and training to carry out its mandate and extend its maritime operations.

The U.S. should recognize that the LAF has become more than a military force, extending its responsibilities to include FEMA- and Army Corps-style duties following the August explosion and successfully protecting Lebanese citizens’ right to protest. The U.S. should offer technical assistance and training in these fields.

Regional Concerns

There are three specific regional issues that the Biden administration should lead in conjunction with its allies.

Iran

While it is commendable that the Biden administration will reengage Iran on the JCPOA and reestablish its traditional role as balancer in the region, it should take advantage of any negotiation to ensure that it goes beyond denuclearization and includes curbs on missile technology and terrorist proxies and Iran’s hegemonic ambitions.

Israel

The new administration should prioritize the maritime border negotiations between Israel and Lebanon. Such confidence-building measures could lead to further steps, such as negotiations on the Israel-Lebanon land border, including Shebaa Farms, which would remove Hezbollah’s biggest justification for its armed conflict with Israel.

Syria

Getting Syria right after failed attempts under the past two administrations is important to stabilize the region. The U.S. must reassert its leadership on the Syrian issue and maintain support for the Syrian Democratic Forces, with the objective of driving parties to the bargaining table for resolution, addressing a disaster that has resulted in more than 5.6 million refugees and 6.1 million displaced people.

Renewing the Relationship

The measures outlined in this article will not put additional demands on the existing U.S.-Lebanon appropriations, but rather, propose to rearrange policy priorities. The U.S. and Lebanon should renew their partnership during this challenging time in ways that strengthen the security, stability and prosperity of both nations. The U.S. should work to enhance its relationship with Lebanon by showing the leadership to undertake these recommended actions in concert with the Lebanese people and the reform-minded institutions of the Lebanese state.

AMBASSADOR EDWARD GABRIEL served as the U.S. Ambassador to the Kingdom of Morocco from 1997-2001. He serves on the boards of Amideast, the Lebanese American University and The Keystone Policy Center, and he is President of the American Task Force for Lebanon.

Lebanese Elections: Good or Bad for the U.S.?

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United States policymakers should carefully examine the facts before reacting to the results of Lebanon’s parliamentary elections, as there are many different reactions emerging among policymakers. Some reports claim that the Hezbollah faction, with its allies, not only won a large enough number to block major legislation, it may have gained an outright majority in the parliament. Others claim the biggest winners to be the anti-Hezbollah faction, with the Lebanese Forces party almost doubling its numbers.  Nabeel Khoury, a non-resident Senior Fellow at the Atlantic Council states, “The internal balance of power has been jostled and shaken a bit but not basically altered”. He notes that any tally of potential winners “Does not take into account the labyrinths of alliances that were struck during the election campaign.”

Most agree that regardless of so called winners and losers, not much has really changed.  Sami Atallah, head of the Lebanese Center for Policy Studies, suggested in a recent forum that “The real results will come with the formation of the new government and how blocs prevail in gaining key ministries.”  So the pundits and analysts are now observing the political maneuvering to form a new government.

For American policymakers it would be a great mistake to simplify the results into a “Hezbollah won, or Hezbollah lost” assessment.  Unfortunately, some policy makers are already suggesting that the elections show that Hezbollah is taking control of Lebanon and so the US should stop our military and development aid to the country.  With that response, Hezbollah wins for sure, as this would only strengthen their position in the country.

Internal support for Hezbollah in Lebanon is due several factors:  a perceived view that it is the strongest military force in the country, acts as protectors of the sovereignty of the Lebanon against Israeli and outside interference, and as a bastion against ISIS-inspired terrorism. Cutting support for the LAF will surely boost Hezbollah’s narrative as protector of Lebanon. American policymakers should therefore think counterintuitively on this issue.

When it comes to the Lebanese Armed Forces, America should double down on its support. The LAF has proven that it is acting in the interests of both Lebanon and the United States. It is now deployed on 85% of the eastern border of Lebanon, protecting the country against insurgents from Syria. It’s also deploying in the south along the border with Israel and meets regularly with the Israelis and UN on issues such as defining their common border. More has to be done, but importantly the US Department of Defense and the US Central Command give high marks to the LAF for its progress, competence and cooperation in support of American interests in the region, including counterterrorism, implementation of UN resolution 1701 and internal stability.

Furthermore, one only has to visit one or more of the most admired universities in Middle East located in Lebanon – such as the Lebanese American University or American University of Beirut – to witness how American investment in these liberal education institutions are preparing the next generation of leaders in the Middle East in support of American values.

America has major strategic interests in Lebanon. As one Minister put it, “we are the sand bag against the flood of Syrian refugees from reaching the West,” housing more than 1.2M Syrian refugees and more than 400,000 Palestinians. It is the only country in the Middle East which mandates roles and responsibilities for religious sects, including Christians. Most importantly, the LAF is reaching a point where they may be able to demonstrate an ability to take full responsibility for control the entire country.

America should make an informed decision about its interests in Lebanon once the dust on this election is settled and not before.

Edward M. Gabriel is the former US Ambassador to Morocco, 1997-2001, and currently the President of the American Task Force for Lebanon.

UNIFIL and the Lebanese Army Prove Once Again to be a Worthwhile Investment

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UNIFIL forces stationed in Southern Lebanon were able to position themselves on April 15th between the Lebanese Armed Forces (LAF) and Israeli troops to intervene before tensions broke out. Lebanon charged Israel with crossing the “Blue Line,” the controversial demarcated border between the two countries established in 2000. A “high alert” went out as Lebanese troops faced off with the Israeli soldiers, but UNIFIL intervened before things got out of hand. UNIFIL later stated that there were no infractions over the border.

During a visit in June of 2019, an ATFL delegation visited the LAF Southern headquarters and the Blue Line and were encouraged by what we saw. One critical task was bringing together Israeli and Lebanese military for a meeting every six weeks to discuss infractions and disagreements on the demarcation of the Blue Line, creating an atmosphere of dialogue rather than friction.

In our meetings we learned that UNIFIL conducts an average of 460 operations per day, including 75 with the LAF, to monitor infractions and enable the LAF to extend its operations in the south. We were informed that the LAF is capably carrying out its mandate, limiting infractions from Lebanon to a few minor incidents each month, mostly shepherds crossing the Blue Line. The Israelis are violating Lebanese airspace with more than 100 illegal monthly overflights of planes and drones as well as illegal incursions over the Blue Line for “security” purposes. The LAF requires more support to extend its reach more strongly in the south on land and in the Mediterranean Sea to better conduct operations to keep Hezbollah forces out of the area in line with recent UN resolutions and expectations.

By intervening to prevent an incident that could leader to “unintended consequences,” UNFIL demonstrated that it is a cost effective investment for the US, and that US support for the LAF has resulted in a capable, professional, competent, and American trained force when addressing its issues on the Lebanon’s borders.

Will Lebanon’s New Government Deliver In Time?

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After a series of stalemates among its sectarian leaders, Lebanon has finally formed a new government under the recently appointed Prime Minister Hassan Diab, a former American University of Beirut engineering professor. The new cabinet has been criticized as pro-Hezbollah and as closely aligned with the Syrian regime. It continues to be rejected by a large number of citizens who have been demonstrating in the streets for nearly four months.

A closer examination of the new government reveals a large number of technically competent ministers, many of whom were educated in U.S. universities. A debate among the Lebanese is growing between those who want to give the new leadership a chance and those who say it’s dead on arrival because it doesn’t have the power to make real change, address the needs of its citizens, and stop rampant corruption.

One thing is sure, if the government is allowed a period of time to deliver essential services and fails, it will face an even stronger reckoning on the streets in the coming months.

Ambassador Edward M. Gabriel is a former U.S. Ambassador to Morocco and currently President of the American Task Force for Lebanon. He has an extensive background in international affairs, having convened multilateral policy forums involving national security, environmental, and trade and energy issues.

Does the Lebanese Government Have the ‘Courage’ to Make the Right Decisions?

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On my visit to Lebanon several weeks before the current demonstrations began, two Lebanese leaders, one a minister and the other a parliamentarian, described the mood of the Lebanese people and noted the lack of courage by Lebanese government officials, one admitting, “We do not have the courage to address our problems.”

That comment now appears prescient as Lebanon’s crisis is about more than Syrian refugees, who with existing Palestinian refugees and other immigrants, make up at least one-third of the population. This presence adds to the existing pressure on government services, unemployment and underemployment, infrastructure overload, environmental damage, and increased crime. And the government has no national strategy to effectively addresses these concerns.

Nearly daily, Israel threatens to intervene militarily in Lebanon against the Iranian-backed Hezbollah. Israeli jets and drones conduct illegal overflights of Lebanon, while Hezbollah threatens to wreak havoc inside Israel. One miscalculation by either side could lead to a catastrophic war. One almost occurred a month ago when Israel sent drones to the Hezbollah stronghold in the southern suburbs of Beirut; another in December, when Israel first discovered tunnels dug by Hezbollah from Lebanon into Israel.

However, the Israeli military threat and the refugee crisis are not taking up most of the attention of the Lebanese these days. It’s their economy and people from all over the country and across all sectarian groups are demonstrating in the streets.

Incredible! A literal ocean of demonstrators in #Beirut as 1.5 million people (1/4 of #Lebanon’s entire population) hit the streets today to protest corruption and economic inequality.

The Lebanese are fed up with this atrocious system. #LebanonProtests pic.twitter.com/63qGpKsJxE

— Sarah Abdallah (@sahouraxo) October 20, 2019

They have many reasons to demonstrate. Economic growth could be in negative territory in 2019; bond agencies have rated Lebanese bonds as “deep junk;” unemployment and poverty are on the rise; and the government has little in the way of resources and management to address the country’s socio-economic problems. The Central Bank of Lebanon has enacted monetary policies to maintain the value of the Lebanese pound to prevent economic collapse, rampant inflation, and wage instability. But this cannot last without sound fiscal measures taken by the government. Adding to these pressures are the decrease of remittances and deposits from the Lebanese diaspora and the decline in significant deposits and foreign direct investment from Gulf countries, principally the UAE and Saudi Arabia, who have blocked their investments to Lebanon due to the Iranian influence on Hezbollah. In addition, the Syrian war has also cut off Lebanon from its only overland trade routes.

The U.S. has made its position clear by taking on Hezbollah by taking tough steps to weaken Hezbollah and Iran, sanctioning individuals and two banks in Lebanon, most recently, Jammal Trust. This affected 85,000 mostly innocent Shiite depositors who face challenges in retrieving and transferring their accounts. This is perceived by some as the U.S. targeting Lebanon’s Shiite community. The banking sector makes up 14% of the GDP of the country, and protecting this industry is a must if Lebanon is to recover.

There is a new U.S. Assistant Secretary of State for Near East Affairs and there will soon be a new U.S. Ambassador to Lebanon. These changes lead Lebanese officials to wonder if ongoing U.S. support will continue, especially regarding its negotiations on the Lebanon-Israel land and maritime borders, putting into question the future potential of natural gas development.

#Lebanon ??: this is #Beirut today after two days of protests.

This movement is cutting through sectarian divides, Sunnis, Shia and Christians all join together to call for a better Lebanon pic.twitter.com/3xaLge3oVd

— Thomas van Linge (@ThomasVLinge) October 19, 2019

“It’s the perfect storm,” said one Lebanese official. Another remarked, “The U.S. wants us to be more aggressive with Hezbollah and in our economic policies. We have little room to maneuver,” adding, “We need breathing space…This is not our problem alone.” It is a problem involving outside actors much larger than Lebanon: Syria, Russia, Iran, Israel, Saudi Arabia, Turkey, and the United States. They have as much an effect on Lebanon as Lebanon’s internal actors.

As the U.S. has reduced its involvement in the Middle East, Russia sees an opportunity to fill the void and exert leadership. Russia claims to be a more dependable alternative, promising Lebanon and its neighbors increased trade, military equipment, and conflict mediation regarding Lebanon’s refugee repatriation. So far, Russia has shown little action and questionable capability, but this propaganda works at a time of U.S. regional retreat.

Despite Lebanon’s fears of abandonment, and in response to the legitimate concerns of the demonstrators, the U.S. can be helpful in many ways. For example, emphasizing its commitment to the sovereignty, independence, and stability of Lebanon, providing significant funding in direct military and foreign assistance, and continuing visits by senior diplomatic and military officials.

Time is running out however for the Lebanese government to show the courage to make the tough decisions necessary to right its economy. Thousands of Lebanese are demonstrating in the streets, expressing their frustration with a government that is failing to take decisive action on the economy.

The government has the power to make the needed changes, address its economic woes, and take control of its destiny. It has been offered $11 billion in soft loans and grants by international donors to rebuild infrastructure, kick-start the economy, and privatize government-run entities.

The international community however expects Lebanon to reduce its budget and public workforce, create transparent oversight mechanisms, and institute anti-corruption policies that will allow this beautiful country to reclaim its historic role as an economic model in the Middle East. The demonstrators are showing their concern and commitment to a more free, open, transparent, and inclusive Lebanon…will the politicians take up the challenge? All it takes is a little courage.

 

Lebanese are Tired of Hosting Syrian Refugees

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Edward Gabriel

Edward Gabriel is a former US Ambassador to Morocco and currently President of the American Task Force for Lebanon.

Also available in العربية

July 16, 2019

A delegation of the American Task Force for Lebanon (ATFL) just returned from a trip to Lebanon, where it met with over a hundred representatives of government, business, civil society, and academia while also visiting a Syrian refugee settlement in the Bekaa Valley. During the trip, I and other members of the delegation were struck not only by the deteriorating humanitarian crisis in Lebanon but also by how many Lebanese blame the strains of their country on the significant number of Syrian refugees who remain in the country. Without the partnership of the United States, Lebanon, and the international community, we fear these suffering refugees and host communities will become even bigger losers in a larger regional conflict.

Among those with whom we discussed the issue, we found a prevalent belief in a number of factual errors regarding the refugee situation, which can lead to increasing tension in the country. One fact is indisputable: Lebanon’s Syrian refugees, displaced persons, and Palestinian refugees from Syria—numbering more than 1.5 million in total—are the equivalent of the entire population of Canada and most of Mexico flowing into the United States within a short period of time. By comparison, the United States resettled 62 Syrian refugees last year.

Some say the refugees are getting so much aid money that they want to stay in Lebanon. This is not true; most Syrian refugees survive on less than 3 dollars a day. UNHCR reported to us that the average refugee family pays more to lease land for their temporary shelters from local land owners than they receive from UNHCR. One refugee mother we visited said, “The Lebanese were welcoming at first, but now they don’t want us here anymore. I want to go back.” A UNHCR survey confirms this sentiment: 89 percent of the refugees polled want to go back home, about 5 percent want to go to third countries, and about 5 percent give other responses. For those who want to return, their principal hesitation about going back is security, both personal and economic.

Lebanese also feel as though Syrians are taking jobs away from them since Syrians will work for less pay. According to an NGO in Lebanon that we met with, Lebanon was creating about 3,800 new jobs per year before 2011. Since the refugee crisis, Lebanon has actually created about 10,000 jobs per year, including a net increase for Lebanese teachers and other skills.

On the other hand, the Central Bank Governor said that Syrian refugees impose a direct cost of about $1 billion a year and an indirect cost of $3.5 billion on Lebanon, which is much more than the $1.1 billion received in 2018, although this does not include economic multiplier effects from donor aid.

Government security officials told us that the greatly inflated number of crimes attributed to the refugees has actually increased by less than 1 percent. Most Syrians are arrested not for petty or more serious crimes but are instead detained for not having proper paperwork. Since about 190,000 refugees who returned to Syria were not registered under UNHCR, their ‘crime’ was attempting to enter Lebanon or transit to Syria without proper documentation.

In informal discussions with UN officials, we were told the time may be ripe to create incentives in Syria to attract some refugees home. Although initially these efforts may only be marginally effective, UN officials believe Russia and European countries should discuss amnesty from military service for returning refugees with the Syrian regime, revising laws to make it easier for refugees to reclaim and rebuild their homes. It is also vital that the UNHCR have access to returned refugees inside of Syria to address their needs.

However, the UN and international donors also emphasized that significant refugee relocation from Lebanon will not occur without a political settlement that guarantees safe return and opens the door to reconstruction monies in Syria. Several American and UN diplomats added that this would not happen with Assad in power, at least for several years. In the meantime, one suggestion to handle reconstruction was to release frozen stabilization monies for projects in eastern Syria, where U.S. forces are already present to oversee reconstruction efforts.

The growing crisis in Lebanon appears unsustainable without significant intervention. It will require U.S. leadership to find solutions that not only provide aid and calls for the safe and voluntary return of the refugees, but also examine other proposals that hold the potential to ease the burden on all parties.

Among the efforts that should be on the table, the international community, including Russia and Europe—and eventually the United States—should press Syria to consider proposals that make it easier for refugees who want to voluntarily return. These refugees must have their safety guaranteed and access to international support. They must know also be assured they can return to their homes and those of military age will not face conscription.

The United States should release stabilization monies in areas of eastern Syria under its protection to rebuild there. Resettlement efforts should prioritize refugees from Lebanon who want to move to eastern Syria voluntarily.

While the international community must encourage the eventual return of refugees to Syria, international donors should also join with U.S. efforts in providing aid to Lebanon to support host communities and the refugees. Such aid should reflect the actual cost incurred by the Lebanese economy, which is strapped with burgeoning budget deficits.

At the same time, the Lebanese government should take responsibility to tamp down the increasing negative reactions by the Lebanese towards the refugees. Negative rhetoric by government leaders only fuel the anti-refugee sentiment. Government leaders instead should balance such comments with an understanding that they support the safe and voluntary return of refugees according to international standards, and in the meantime call on international donors to support programs that assist host communities and refugees in this plight.

Lebanon and the United States need to show each other there are win-win solutions that benefit all parties, and together they can work towards a fair, just, voluntary, safe, and timely resolution to this crisis.

 

 

 

Fikra Forum is an initiative of the Washington Institute for Near East Policy. The views expressed by Fikra Forum contributors are the personal views of the individual authors, and are not necessarily endorsed by the Institute, its staff, Board of Directors, or Board of Advisors.​​

In Lebanon, a new chance … or another missed opportunity?

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Following Lebanon’s parliamentary elections in May 2018, and almost nine months of negotiating, the various elected parties finally have formed a government. This comes just before the one-year anniversaries of three international conferences in which billions of dollars in aid were pledged to Lebanon for refugees and infrastructure and military support. Most of the aid was contingent upon the formation of a government passing significant reforms, which happened just as international donors were about to give up on their pledges of support.

This could spell good news for the country if it is able to take the necessary steps to maintain the support of international donors, and separately, show that the government can operate independently despite the apparent growing role of Hezbollah.

Last March, some 40 countries participated in a meeting, along with United Nations Secretary General Antonio Guterres and Lebanese Prime Minister Saad Hariri, to reaffirm their commitment of aid “in support of the stability, security, sovereignty and political independence of Lebanon.”

At the Friends of Syria donor conference in Brussels in May, donor countries pledged $4.4 billion in refugee humanitarian support to Lebanon and other neighboring countries. Most importantly, Lebanon won aid pledges exceeding $11 billion in April 2018 at a Paris CEDRE conference aimed at rallying international support for an investment program to boost its economy.

Two important actions could take advantage of these international commitments and jump-start an otherwise deteriorating Lebanese economy and debilitating growth rate. The government must show that it can manage more than $11 billion in concessionary loans and grants in a transparent manner according to international standards, and properly administer major infrastructure projects, free of corruption. Lebanon also must privatize a number of government-run businesses, such as energy and electricity. Privatizing these government responsibilities will reduce the Lebanese budget deficit by $2 billion.

Some analysts say, however, that the effort to reform government is fraught with major hurdles as the new government represents the same political factions guilty of exploiting public funds to strengthen their bases and maintain their electorates. As they say, old habits die hard.

In the newly formed government, Hezbollah has increased its responsibility by taking control of the minister of health position, a ministry with the fourth-largest public budget, which gives it the resources to bestow patronage jobs and subsidized health care benefits to constituents. The United States already has imposed sanctions on known terrorists associated with Hezbollah and could ratchet it up further, if it finds that resources or services of the ministry are supporting Hezbollah.

The U.S. Embassy in Beirut has made its position clear: “[Insisting on the Health Ministry] is yet another example of Hezbollah openly holding Lebanon’s security and prosperity hostage,” said Rachel Mikeska, a spokeswoman for the American Embassy in Lebanon. She added that the United States is “prepared to take whatever actions are necessary to protect the interests of the Lebanese people.”

Curbing the influence of Hezbollah requires deftness on the part of the Lebanese government and its supporters, such as the United States. It will require a scalpel, not a shotgun approach, since it’s in the interest of both the United States and Lebanon to control the increasing influence of Hezbollah in such a way that will not destabilize the country and will support other key U.S. interests in the region.

At the same time, the United States understands it must be careful in its approach. By strengthening Lebanese civil society and educational institutions free of Hezbollah influence — such as the two American universities of higher education, the American University of Beirut and the Lebanese American University — and remaining the major supplier of military aid to the Lebanese Armed Forces, it provides a counterbalance to Hezbollah. The United States also has tightened banking restrictions against specific Hezbollah members, but preferred not to target the organization as a whole. In doing so, it has helped to preserve the important banking sector while weeding out bad actors.

Lebanon already is in a tenuous situation, economically and politically. The U.S. tempered response thus far has avoided further destabilizing the country but achieved its anti-terrorism goals in the country.

America’s patience won’t last forever, however.  The Lebanese government must take steps to pull factions together in common cause for good governance, open reforms, security and rejection of terrorism. Hezbollah represents a minority of the Lebanese people. It is time for Lebanese citizens to refuse to tolerate the status quo. This is an opportunity, and Lebanese citizens should  expect their government to retake its historic role in the Middle East as an island of peace, tolerance and prosperity.

Edward M. Gabriel is president of the American Task Force for Lebanon and former U.S. ambassador to Morocco (1997-2001).

The Lebanese economy faces a critical turning point

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It is an understatement to say that the Lebanese are preoccupied with the state of their economy. Yet during a recent visit to the country, the American Task Force for Lebanon did not find a consensus within the government on the tough actions needed to prevent the Lebanese economy from collapse.

Lebanon barely recorded a 1 percent rate of growth this past year. It has the fourth worst debt to GDP ratio in the world and is at the bottom of the rankings for infrastructure development. Its deficit is running at about $5 billion annually, which will push the debt to GDP ratio to 200% in a few years. Also, Lebanon’s credit rating is declining and this is eroding confidence in attracting foreign investment.

The Central Bank has engineered a monetary policy that many experts believe has bought the country two more years of time to enact a strong fiscal policy before the economy hits bottom. One can only hope that the government understands this and acts quickly.

The Lebanese economy is plagued by two problems: growing public deficits, in large part because of the financial drain of government-run businesses, and a lack of government transparency. Many believe the two issues are interrelated and can be fixed if the government recognizes it no longer can put personal interests ahead of the country’s interests and must find consensus.

International donors have stepped forward, encouraging Lebanon to deal with its dilemma by offering up to $11 billion in soft loans and grants (called the CEDRE) for infrastructure projects such as electricity, roads, information highways and privatization of other government businesses such as the ports, airports and telecommunications. This support, however, is dependent on the government reforming the way it does business by creating more transparency through an open tender process, independent regulatory sector agencies, and disengaging itself from government-run businesses.

The electricity sector is a prime example of how privatization can help bring down the deficit and significantly reduce corruption. Subsidizing the sector costs the government $1.5 billion a year, roughly a quarter of the deficit. Privatizing electricity generation would be a good beginning if carried out transparently and according to international standards. With responsible electricity reform, the government is proposing a budget with a 7.6 percent deficit, as opposed to an 11.4 percent deficit last year.

The devil is in the details. We found that the Lebanese policy community at large, and the government in particular, may not fully understand the specifics of various projects and surely lack agreement on what to do. Some want to leave part of the decision-making of newly privatized companies with the government. Others want CEDRE loans to go directly to the private sector and not the government, to build and operate the privatized facilities; the government would establish independent regulatory authorities to regulate operations and pricing.

Still others say the loans should be given without strings attached, meaning without a demand for reforms. They say that “we need time” to find consensus and, with only a two-year window, no real change can happen in this short period. Saving Lebanon from default should come before reforms, they argue.

Several government officials said the CEDRE money originally was meant to help Syrian refugees by creating construction jobs. Their logic is that the international donors, therefore, would have no choice but to provide funding, regardless of reforms, as long as nearly 1 million refugees remain.

One official with whom we met said, “You can’t clean a house with a dirty mop,” suggesting that they were trying to change the very people who are benefitting from the old order of doing business. Another official opined on who would blink first, the World Bank or the Lebanese? Many Lebanese politicians are banking on the former.

Is there a middle ground? Can increments of money be allocated based upon certain reform markers being met within certain timeframes? Who will blink first? Maybe it’s time for the international community, especially donors, the U.S. and France, to come to a clear understanding with their Lebanese partners about the detailed aspects of donor expectations as well as understanding the tenuous state of the Lebanese economy.

The U.S. Embassy also should continue, and expedite, its dialogues with key decision-makers to clarify donor expectations and facilitate stakeholder consensus around common U.S.-Lebanon objectives on revitalizing the economy. Time is of the essence.

Edward M. Gabriel is president of the American Task Force for Lebanon and former U.S. ambassador to Morocco (1997-2001).

UNIFIL and the Lebanese Army, a worthwhile US investment

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Recently, there has been concern over whether U.S. assistance for foreign militaries and UN global peacekeeping missions is worthwhile. I just returned from the Israeli-Lebanese border, where I saw first-hand the work of the Lebanese Armed Forces (LAF) and its partner, the United Nations Interim Force in Lebanon (UNIFIL). This is a positive story that the Washington policy community should be made aware of.

My colleagues and I at the American Task Force for Lebanon (ATFL) visited the LAF southern headquarters, the UNIFIL headquarters, and the Blue Line, established in 2000, separating Israel and Lebanon. We were encouraged by what we saw.

UNIFIL was established in 1978, under UN Security Council Resolution 425, to confirm the withdrawal of Israeli forces from Lebanon. Following the 2006 Israel-Hezbollah conflict, the UN adjusted its mandate to facilitate the entry of the LAF to south Lebanon and monitor the cessation of hostilities.

Each August the UN Security Council reviews and votes to renew the mandate of UNIFIL. Last year, the Council encouraged Lebanon to deploy a model regiment and an offshore patrol vessel in UNIFIL’s area of operations and accelerate its deployments in the area. Evidence today shows that UNIFIL and LAF are fulfilling this mission with great success.

Lebanon and Israel do not have a peace agreement and often refer to each other as the “enemy.” However, it is scarcely known that Israeli and Lebanese generals have been meeting in a building on the Blue Line about every six weeks for more than a dozen years, discussing infractions and disagreements on the demarcation of the Blue Line. UNIFIL chairs and facilitates the discussion. They and UN representatives make up two sides of a four-sided table with Israeli and Lebanese generals facing each other.

During their meetings over the past decade the generals have identified 13 areas on the Blue Line called “reservations,” which indicate disagreements on precisely where the Blue Line should be drawn when examined on an enlarged, more detailed map. Although the generals are not empowered to negotiate on behalf of their countries, this ongoing dialogue demonstrates what is possible if the two governments one day negotiate a final settlement of their border. These are tangible confidence-building discussions.

We learned that Israeli and Lebanese experts believe that only two areas of the 13 reservations remain “difficult.” One could be settled by exchanges of secure heights overlooking an Israeli settlement for more land to Lebanon. The other contentious reservation is the Mediterranean Sea marker (commonly referred to as the Hof Line), which some believe is an issue that requires a separate negotiation.

In our meetings we learned that UNIFIL conducts an average of 460 operations per day, including 75 with the LAF, to monitor infractions and enable the LAF to extend its operations in the south. We were informed that the LAF is capably carrying out its mandate, limiting infractions from Lebanon to a few minor incidents each month, mostly shepherds crossing the Blue Line. The Israelis violate Lebanese airspace with more than 100 illegal monthly overflights of planes and drones as well as illegal incursions over the Blue Line.

Although there have been some points of contention, such as the Israelis deciding to build a wall and fence on two disputed areas without a resolution, and the Lebanese not making a public statement confirming tunnels discovered on the Israeli side of the Blue Line, a historic breakthrough could still happen.

Following Secretary of State Mike Pompeo’s visit to Lebanon in March, Special Envoy David Satterfield has been shuttling between Lebanon and Israel to engage the parties in a political dialogue to settle either the land or maritime border, or both. It would be historic to achieve even a partial settlement of the border dispute.

The work of LAF and UNIFIL is proving to be worthwhile and, if negotiations begin in earnest in the coming weeks, they should take a large part of the credit, given their great work in interacting with Israeli generals and keeping peace on the border for nearly 13 years. The excellent performance by the UN and LAF should be acknowledged by the U.S. policy community as well.

 

Ambassador Edward M. Gabriel is the former U.S. Ambassador to the Kingdom of Morocco and President and CEO of the American Task Force on Lebanon. The views expressed in this article are his own. 

Photo by Muhammed Ali Akman/Anadolu Agency/Getty Images