The Disaster in Lebanon and Challenge for the Biden Administration
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.
There are three specific regional issues that the Biden administration should lead in conjunction with its allies.
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.
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.
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.