Following her meetings with Lebanon’s current top leadership, newly appointed US Ambassador Dorothy Shea issued a statement that emphasized that “The people of Lebanon have rightly called for reform, an end to corruption, and the imposition of effective policies necessary to extricate Lebanon from its an unprecedented economic crisis. The United States continues to back the protesters’ legitimate demands for economic opportunity, accountability, and transparency. Only by meeting those demands can Lebanon initiate the difficult process of restoring international confidence.”
She went on to say that “The United States is proud to have been a committed partner to Lebanon since the 1800s. We have deep ties in education, in business, in security, and in people-to-people and family relationships, including my own, that touch all walks of life. We seek a bright future for the Lebanese people, who deserve a stable, secure, sovereign, and prosperous country. We stand with the Lebanese people in encouraging their government to effect real change in its policies, and to chart a course that will earn the confidence of those it means to govern – and, in doing so, secure the support of the international community.”
While there was no direct mention of complications caused by Iran’s dominant influence in the political landscape through its proxy Hezbollah, or of the specific expectations of US policy makers, Ambassador Shea noted that her discussions focused on the “strength and potential of the U.S. partnership with Lebanon, and our shared stake in a Lebanon that is stable, secure, and sovereign. This is a partnership that is vitally important not only to both of our countries, but to all of the countries in the region.”
How Lebanon will cope with its existing economic disaster compounded by the spread of the COVID-19 virus that is crippling businesses, overwhelming health facilities, and draining resources already in short supply, is a draconian test for the Diab government.
That there are no linear solutions was stressed by Jan Kubis, the UN envoy to Lebanon in his latest meetings with the current leadership. After meeting with President Aoun, Kubis noted that “The government is working at a rapid pace to implement the reform plan that deals with debt restructuring, banks, financial and administrative reform, in addition to the social and economic plan”and reiterated that the government must take its own steps to mitigate the economic crisis before any outside help. He summed up the international position as “the conditions are reforms, reforms, reforms.The new government will come with a clear action plan with deadlines, and then, we will try to help, but it must start with the work of the government.”
Kubis noted that the government’s pledge to accelerate the economic reform process after suspending payment of its Eurobond debt due March 9 was a step in the right direction. “The Honest statement of PM @Hassan Diab about the failure of the previous economic model opens the way out of the crisis. I encourage creditors to work with the government to avoid disorderly default following the suspension of the 9 March Eurobonds payment dictated by the critical situation of the country.”
An issue that was not reported in the meetings between Shea and Lebanese leaders was the US position on the Syrian refugees. However, on the 9th anniversary of the beginning of the uprising in Syria the US State Department issued a statement that said, “We encourage the international community to continue to provide assistance to Syria’s neighbors to share the costs of Syria’s refugee crisis. Displaced Syrians must be allowed to return voluntarily and safely to their homes, without fear of arbitrary detention, violation of rights and forced conscription. Yet, the Syrian regime continues to prevent them from doing so.” With the continued stalemate in both northwestern and northeastern Syria, there doesn’t seem to be any movement on refugee resettlement in the short term.
For readers who want a deeper dive on the economy and options for actions, I recommend two sources. The first is a paper produced by LIFE (Lebanese International Financial Executives) that focuses on “Saving the Lebanese Financial Sector: Issues and Recommendations,” and argues that “In order to restore confidence in the banking sector, the government and the Banque du Liban (BDL) need a comprehensive stabilization plan for the economy as a whole including substantial fiscal consolidation measures, external liquidity injection from multi-national donors, debt restructuring and a banking sector recapitalization plan.” The paper is available here.
A very valuable overview is the latest blog from the Lebanese Center for Policy Studies that you can find here. It posits that “A durable solution will require an all-hands-on-deck approach, involving negotiations with multiple stakeholders from whom enormous sacrifices will be asked. Recovering from the crisis will involve three separate yet complementary negotiating vectors.” They identify these as negotiations with private creditors, banking sector, and “the formulation of a strong and credible economic recovery program for which, realistically, an IMF arrangement backed financially by foreign donors will have to be made.” The last point is the subject of wide debate among the leadership who are reluctant to allow their interests to be exposed to reform measures.