by Hanin Ghaddar*
Two weeks after announcing his resignation from Riyadh, Lebanese Prime Minister Saad Hariri declared Wednesday he was putting his resignation on hold. Upon his return to Lebanon for Independence Day, Hariri said that he had accepted President Michel Aoun’s wish for him to suspend his resignation to allow for more consultations on the reasons behind the move.
This doesn’t mean that things will go back to the way they are. Hariri has given his conditions that he carried from Riyadh, and he is now giving Aoun a chance to communicate with Hezbollah. But what’s clear is that the pre-resignation phase is no longer sustainable and Lebanon has entered a new era.
Hezbollah has enjoyed a golden age in Lebanon, fostered by the Obama Administration for years. With a complete US absence from the region’s political scene, they managed to consolidate their power over Lebanon through the state institutions, by bringing their ally Michel Aoun as a president, and then passing an electoral law that would guarantee around 70% of the next Lebanese parliament. They also managed to force the Lebanese state to re-engage with the Syrian regime, by coordinating border military operations, and sending an ambassador to Damascus.
Regionally, Hezbollah used Lebanon as a room to run their regional military operations from Syria to Yemen, via Iraq and the Gulf. No one was standing in their way, and they even helped Iran establish its Shia crescent; that is, the land bride that connects Tehran to Beirut and the Mediterranean. Their power in the region has got to a point where Iran became one of the main players to the extent that European countries are now considering changing relations with Tehran, beyond business deals.
Hariri’s resignation won’t change everything. Of course it will have to be followed up with other measures, and a strategy for the region that would include all those whose regional interests have been jeopardized by Iran’s hegemony. However, some things have already changed. For example, Hezbollah will now have to reconsider many controversial steps, such as forcing the Lebanese state institutions to naturalize with the Assad regime. But most significantly, Hezbollah is now exposed. Without Hariri’s government to cover its domination, Hezbollah’s arsenal and regional operations are now back on the table, locally, regionally, and internationally. And today, the Lebanese state as a whole will be held responsible. The “consensus” that was the core of politics in Lebanon during the past year is no longer feasible.
LEBANON A HOSTAGE STATE
There’s no doubt that Lebanese PM Saad Hariri’s resignation has shaken Hezbollah. It was an unexpected surprise. Since Hariri was asked to form a government almost a year ago, the idea was to find a way to keep Lebanon safe from the regional turmoil, and also create a balance to Hezbollah’s growing control over the Lebanese State and its institutions. And when President Michel Aoun started his term as the President of Lebanon – based on this plan – there were hopes that both Aoun and Hariri will manage to work together to find this balance. However, this vision failed miserably.
As months passed, the Lebanese realized that Hezbollah’s power over Lebanon has actually increased, and that no one seems to be stopping Iran in Syria, Iraq, and Yemen. The land bridge that connects Tehran to Beirut is almost complete, as the battle of Bou Kamal in Deir Ezzour in Syria is over. Iran has declared victory and Russia is leading the peace process with Assad as the president of Syria.
Lebanon became Iran’s safe zone, and it was a matter of time before Hezbollah drags Lebanon to its regional wars. Today, Lebanon is open to the regional confrontations because Hezbollah decided this in year 2012 when it sent its fighters to Syria. This did not start with Hariri’s resignation or Saudi Arabia’s reaction. The main issue remains Hezbollah’s regional role and no other “consensus” can change that.
Two things are at stake, the economy and the next parliamentary elections, due in May 2018.
LEBANON’S ECONOMY AT STAKE
It doesn’t seem that any regional or international power is willing to start a war with Hezbollah in Lebanon at this point. Fighting this war could easily lead to a war with Iran in the region, for two reasons: one, Hezbollah is no longer a Lebanese party that is confined in Lebanon. Its regional role overstretched the party of God throughout the region, and allowed it to spread its weapons and gain more advanced ones. Two, a regional war with Hezbollah might drag in many other Shia militias to fight it, in addition to the Iranian Revolutionary Guards Corps – Quds Force, which functions as an umbrella to these militias. That’s why other punitive measures – such as economic pressures – could apply.
In addition to the upcoming US sanctions on Hezbollah, Saudi Arabia and other Gulf States might use their economic ties with Lebanon to apply pressure.
Five million Lebanese are estimated to reside abroad, so remittances account for nearly 16 percent of Lebanon’s GDP. In 2016, Lebanese abroad sent home nearly $7.2 billion. Two-thirds of this income is generated in GCC states, the vast majority of which from Saudi Arabia. With an estimated 400,000 workers, the GCC states are a key source of Lebanese remittances. The immediate concern is the threat that Saudi Arabia — along with the UAE — might expel Lebanese nationals.
Internally, Hariri’s resignation could affect several items passed in 2016 by his cabinet, including decrees regulating offshore oil and gas exploration as well as the new national budget, Lebanon’s first in twelve years. The Gulf also has leverage on Lebanese trade, accounting for 20 percent of Lebanon’s total exports. But most significantly, eighty percent of foreign direct investment in Lebanon comes from the Gulf, 40 percent of which is in the real estate sector. Lately, Lebanon has witnessed a reported 10-20 percent drop in real estate values. A Gulf selloff would have further serious consequences for Lebanon’s real estate market.
Saudi Arabia also has an impact on the critical Lebanese banking sector. Saudi deposits at the Lebanese central bank are about $860 million, the sum originally placed there to help stabilize the Lebanese lira when Rafiq Hariri, Saad’s late father, was first elected prime minister in 1992. Now that Saudi Arabia has expressed its view of a Lebanese “declaration of war,” and that Saad Hariri has resigned, concerns have arisen that Riyadh could withdraw these deposits. While overall the deposits account for only about 2 percent of Lebanon’s foreign reserves, their removal could shake confidence in the Central Bank, if not destabilize the lira.
On the tourism sector, the consequences could also be grave. Before the first Gulf tourism boycott of Lebanon in 2012, in response to Hezbollah’s military activities in Syria in support of the Assad regime, Saudi tourists constituted a quarter of all visitors to the state. Although Gulf tourists started returning gradually over the years, they have not since exceeded 8 percent of the total. The decrease in Gulf tourists mainly hurt the hotel sector, driving occupancy down to 40 percent of 2010 levels, and overnight hotel rates down to 56.6 percent of the prior levels. On November 9, Riyadh advised Saudi citizens not to travel to Lebanon; Kuwait and Bahrain quickly followed suit.
Lebanon today faces a serious void in its institutions. Hariri has put his resignation on hold for two weeks, after which he will have to hear from Aoun and Hezbollah. It is most likely that the conditions he presented to back off his resignation won’t be met. Consequently, he will officially resign and Aoun will have to accept his resignation. Afterwards, all eyes will be on the next parliamentary elections.
It won’t be easy to replace Hariri with another Sunni leader that has the same substantial representation within the Sunni community and at the same time provide an appropriate cover to Hezbollah. But the new proportional law that Hariri’s government had passed is considered by many Lebanese to be a pro-Hezbollah law, as it will probably guarantee the party of God the majority of the parliament by allowing its allies more seats. Hezbollah will try its best to keep a grip on Lebanon amid growing regional and domestic challenges. A serious push back, particularly against the backdrop of upcoming elections, is a must in the coming phase, mainly supporting anti-Hezbollah candidates or pushing to change the electoral law.
In any case, the next phase of the Lebanese crisis is going to be thorny, and requires efforts by all regional and international factors. Pressuring Aoun and distancing Hezbollah from the Lebanese State, in addition to focusing on its regional role are issues that should not be compromised. As Lebanon joins the regional confrontation, any resolution of the current crisis is by all means linked to the resolution of regional issues, mainly in Syria, Iraq, and Yemen. And the main prerequisite remains: contain Iran in the region.
*Hanin Ghaddar is the inaugural Friedmann Visiting Fellow at The Washington Institute.