Wed. Aug 10th, 2022

Lebanon Is Facing an Economic and Environmental Disaster

Lebanon’s fragile communitarian democracy is hobbling on. After more than 250 days of political deadlock that threatened to bring down the economy, Prime Minister Saad Hariri now presides over another unity government, Lebanon’s sixth since the devastating 2006 war between Israel and Hezbollah.

When analysts and policymakers assess Lebanon’s long list of problems, political sectarianism and the general split between pro- and anti-Syrian factions in the country usually come first. The idea that sectarian tensions and proxy conflicts between regional hegemons Iran and Saudi Arabia are keeping Lebanon trapped is the general, tired storyline about the country. The Syrian war, so the logic goes, has ostensibly made good governance in Lebanon nearly impossible.

The new 30-member unity government will probably not change that picture. It includes all the major political parties in Lebanon. President Michel Aoun and his Free Patriotic Movement have the biggest share with 10 seats, while the Shiite duo Hezbollah and the Amal Movement holds six seats combined. Hariri has six seats, and his allies—the Christian Lebanese Forces—have four, the rest going to smaller groups. It is a divided cabinet with often opposing views on foreign policy; therefore, policymaking is likely to be lethargic and reactive, as has been the case for the past decade.

The U.S. response has been to beef up the Lebanese Armed Forces, while European aid has focused on mitigating the Syrian refugee crisis in the country. No one can doubt the serious implications of regional competition and sectarian tensions in Lebanon. In the past, they have threatened to bring the country back to the brink of war. Seen in this light, it is necessary to address both the security sector and refugee aid.

But, as the refugee crisis has only made clearer, the primary structural challenges to stability and security in Lebanon are now economic and ecological. Stopgap measures will not suffice much longer. Pollution is rampant; burned and dumped trash is spoiling the natural environment and contaminating water. Lebanon’s economy is faltering under the weight of mismanagement, debt, and Syrian refugees. Western policymakers have to consider these factors if they care about protecting civil peace in the country.

The previous government did very little to prevent Lebanon’s infrastructure from crumbling. Mainly due to corruption, Interior Minister Nohad Machnouk failed to find a permanent solution for trash collection. As a result, people continue to burn toxic trash near urban developments and dump rubbish into coastal landfills as well as the Mediterranean Sea with disastrous effects for the environment and public health. Contamination and depletion of the ground water have reached catastrophic levels. At the same time, electricity cuts are frequent, leaving the poorest parts of the country without power in the hot summer months and with no heating in the winter. For the one-third of the country living below the $1.90 per day international poverty line, Lebanon feels more like a failed state than a middle-income democracy.

The environment has deteriorated apace with public trust in the government and hope for the future. Elites have put their faith in Lebanon’s famed flexible economy, which relies on remittances from abroad and people’s general ability to innovate and ride out hard times. But in recent years, even for the middle class, the country’s economic future has begun to look very uncertain. Growth rates have sunk from 8 to 1 percent since the years before the Syrian war, and the budget deficit has skyrocketed as the country’s soaring debt passed $80 billion last year.

Nothing suggests that this government will be less dysfunctional than previous ones, even if some of the appointed ministers may be able to devise new policies to address the country’s serious economic and ecological challenges. Raya al-Hassan, the first female interior minister in any Arab country, could push for sorely needed anti-corruption measures and an overhaul of Lebanon’s endemic trash removal problems.

The urgency of the situation was highlighted recently when, on Jan. 21, Moody’s Investors Service downgraded the country’s credit rating amid concerns over its ability to service its debts. Bond prices rallied on the news of the new government’s formation, but this could be a temporary reaction unless it produces results quickly. Lebanon is in real danger of defaulting in the coming years.

The outside world needs to see results now, and Hariri knows it. After announcing the new government on Jan. 31, he immediately emphasized the need to stabilize the economy by passing reform bills that would trigger more than $11 billion in aid and loans for infrastructure investment pledged at the April 2018 CEDRE donor conference. Here, Western governments, Saudi Arabia, and international monetary institutions pegged aid to structural reforms that would bring in foreign investments, improve infrastructure, and reduce corruption. To meet the demands, Lebanon has to reduce the budget deficit by 5 percent of GDP within five years. It is a tall order, with almost 50 percent of government revenues currently going toward servicing the country’s already substantial debts of around 150 percent of GDP. Without drastic reforms, there is little chance of hitting the 5 percent target.

The loans were locked due to political infighting last year. Initially, Christian and Druze leaders disagreed over their representation. When parties reached a breakthrough, Hezbollah added a new demand, pushing for control of a ministry to be handed to the Consultative Gathering, a grouping of six pro-Syria Sunni members of parliament opposed to Hariri, whose Future Movement is the largest Sunni faction.

Hariri rejected Hezbollah’s demands, fearing they would allow the Shiite party to increase its dominance. As international pressure mounted, however, he eventually accepted a compromise candidate, Hassan Mrad, to become the new state minister for foreign trade. Mrad formally belongs to Aoun’s share of cabinet seats but also represents the Consultative Gathering. Under the agreement, Mrad will not vote against Aoun, the veteran Christian leader who struck a deal with Hezbollah in 2006 that eventually landed him the presidency in 2016.

Mrad will not make a big difference to the general picture. Hezbollah’s “Loyalty to the Resistance” bloc formally controls just three ministries—the Ministry for Youth and Sports, the Ministry of Public Health, and the State Ministry for Parliamentary Affairs—but it can effectively lead from behind as it holds a parliamentary majority together with the Shiite party Amal, Aoun’s Free Patriotic Movement, and other allies. They will use it to block legislation that contradicts their foreign policy, not least support of Syrian President Bashar al-Assad.

Hezbollah’s control of the Ministry of Public Health is significant. It has the fourth-largest budget, and this is the first time that the party has taken charge of a major portfolio. It will allow Hezbollah to deliver on promises to its Shiite constituents by improving health services for low-income groups, pushing for free health care for its soldiers returning from Syria, and embedding itself further in state institutions.

These new powers are a double-edged sword because they will leave Hezbollah exposed to criticism if it fails to deliver. At the same time, by increasing its influence within the state, Hezbollah becomes a larger and more difficult target for the United States.

Last year, Washington imposed new sanctions on Hezbollah and threated to target Lebanon itself should Hezbollah take charge of a major ministry. The new minister, Jamil Jabak, is not formally a Hezbollah member but is extremely close to the movement and has served as a personal physician to its leader, Hassan Nasrallah.

The United States will see the appointment as an affront and may consider free health care to Hezbollah members, if the ministry were to provide it, as an example of “significant financial support”—a red line that could be used to justify a reduction in U.S. funding to the health ministry while pressuring other international donors to do the same. (The European Union and the World Bank are currently major donors to the Lebanese health sector.)

Washington could also impose sanctions on hospitals, preventing the export of U.S. medications to the country, or cut off military aid. Both would primarily harm civilians and risk undermining a country that the United States, along with the EU, wants to protect from collapse. Washington is therefore likely to give Hariri a chance to show his ability to rein in Hezbollah’s power.

Jostling to punish Hezbollah is a dangerous distraction from the key challenge. Lebanese policymakers should keep their eyes on reforms which would help stabilize the economy in the short term. They must also introduce new and immediate assistance to the Ministry of Environment and other public bodies to help stop environmental disaster. There is an immediate need to strengthen the state’s ability to address the crisis, but donors should also aid existing but underfunded civil society groups that promote conservation, environmental protection, and recycling.

These are the urgent challenges that ordinary Lebanese citizens face. They are also the ones that will, depending on how they are addressed, determine whether state failure spreads from the margins of the state to its core.

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