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The Gulf’s Role in Lebanon’s Political and Economic Crisis​

The international community is once again coordinating efforts to resolve Lebanon’s political stagnation. Two major Gulf Cooperation Council (GCC) states—Saudi Arabia and Qatar—are leading a joint effort within the “Quincy Committee,” or “Quint,” alongside Egypt, France, and the United States. The forum appears to be developing a “grand bargain” that would resolve Beirut’s presidential vacuum and adjacent issues like economic reform and political appointments like the central bank governor. If such a bargain is possible, Riyadh and Doha will have a substantial role to play in it—as will Iran, which could put the renewed relationship between Tehran and Riyadh to its first serious test.

International Engagement and the Quincy Committee

The Quincy members met on July 17 in Doha to discuss Lebanon’s ongoing political impasse following French special envoy Jean-Yves Le Drian’s visit to the country in early July. The group discussed Beirut’s presidency issues, the Lebanese central bank, and economic and judicial reform. This included talk of potential “measures” against entities “obstructing” the presidential election. These measures likely include targeted sanctions against certain stakeholders, which the European Union has threatened but largely failed to implement in recent years.

Le Drian briefed the delegations from each country on his consultations with Lebanese political leaders. During his trip, the French envoy listened to the perspectives of each major political stakeholder. This effort occurred as rumors of a Riyadh-based National Dialogue Conference appeared in various Lebanese media outlets, indicating Doha and the Kingdom’s strong interest in engaging on the Lebanon issue. Qatar has increased its engagement on Lebanon in recent months and years, in no small part to fill the void left by Saudi Arabia’s relative disengagement from the country across the same period. Riyadh’s earlier 2021 shift was due to the country’s inability to out-compete its arch-rival, Iran, and its Lebanese Hezbollah proxy.

One day after the meeting, the French envoy held a bilateral meeting with Saudi Foreign Minister Prince Faisal bin Farhan al-Saud to discuss the situation. Following their talks, a Saudi official statement noted that the two ministers discussed “Saudi-French relations and strategies to enhance collaboration in areas of mutual interest,” while specifying that “the latest developments in Lebanon, the region, and the world” had each been addressed. The statement’s explicit mention of Lebanon is significant, as it signals a high degree of interest on the part of Riyadh to address Beirut’s political issues. Recent diplomatic exchanges between the Saudis and Iranians only cement the revitalized importance of the context in the Kingdom.

Lebanon’s Interconnected Crises

Still, many root causes leading to Lebanon’s current political and economic crisis remain, culminating in a seemingly permanent level of dysfunction that played a major role in Riyadh’s decreased support for its in-country allies. The Mediterranean state is experiencing one of the worst economic crises in the modern era. Lebanon currently lacks a president, a central bank governor, and a security chief, a bizarre situation unprecedented in the country’s history. The root cause of Lebanon’s interconnected crises rests on a political class that has entrenched corruption, nepotism, and a broken patronage system to prevent reform and enrich itself.

As a result, Beirut’s MPs are opting to protect their interests by blaming each other for the country’s woes. Since Lebanon’s last president, Michel Aoun, left office in October without a successor, the parliament has voted 12 consecutive times to fill the vacancy, but each vote has failed due to parliamentary infighting. This dynamic has allowed for a unique but polarizing scenario in the last vote, which witnessed each of the major Christian parties join hands to elect former finance minister and International Monetary Fund (IMF) official Jihad Azour. The June 14 vote was unprecedented given the fractious nature of the Christian bloc. However, the vote was blocked by Hezbollah and its allies, who support the pro-Syria Marada MP Suleyman Frangieh.

Beirut’s inability to elect a new president, who in turn would authorize a new government and prime minister, has directly impacted Lebanon’s ability to legally govern and fill crucial roles. The situation has sparked fierce debate amongst Lebanese politicians as to the role of the current caretaker government, led by acting Prime Minister Najib Mikati, with some major parties like the Free Patriotic Movement (FPM) boycotting major votes before a president is elected. This constitutional crisis is stretching the limits of the government at the worst possible time—a situation exemplified by the difficulties surrounding the appointment of a central bank governor.

Former Banque Du Liban (BDL) Governor Riad Salameh’s term ended on July 31, leaving confusion surrounding the role of the bank’s four deputy governors and the overall leadership of the institution. Salameh is implicated in corruption probes in multiple countries, including Lebanon, which has diminished confidence in the Lebanese banking system and further fueled the country’s economic tailspin. Lebanese leaders and the international community are particularly focused on ensuring stability at the BDL, given the institution’s importance to any semblance of monetary stability. This concern is probably why the first vice governor and holder of the Shia seat at Lebanon’s central bank, Wassim Mansouri, begrudgingly accepted the role of interim governor the day Salameh’s term ended. Regardless, the bank’s leadership situation must also be resolved amidst the political turmoil swallowing Beirut—a catch-22 situation with serious implications.

The Role of the Gulf

Unfortunately, the solution to Lebanon’s problems is more complicated than a simple display of international engagement. To be sure, Qatar and Saudi Arabia are uniquely positioned to play a strong role in addressing Lebanon’s issues. But resolving the plethora of issues at hand amidst a group of international creditors that is tired of simply giving Lebanon’s corrupt ruling class another bailout will take an outstanding degree of patience and time—something that Lebanon clearly lacks. Ultimately, Beirut’s political stakeholders must accept that change is necessary to save their country, as each Quincy member has highlighted in joint statements.

The Quincy group’s core focus on the presidency is well-placed, given the position’s legal role in establishing a government that can fill crucial ministerial positions. This will likely remain the focus, especially after the central bank vice governors released a monetary plan that can be implemented in the interim. Proposals such as ending “free” money to the government and, absent a government budget in 2023-24, taking a tougher stance by proposing a law limiting Treasury borrowing can help resolve Lebanon’s growing deficit, which has led it to hemorrhage  around $25.5 billion in four years. This plan will hopefully buy Lebanon more time and pressure MPs to resolve the political issues preventing the government’s formation. From here, subsequent economic reforms the IMF is demanding ahead of any financial bailout can be instituted. To be sure, ensuring that each step is achieved once a deal is established between Lebanon’s political leaders to break the presidential impasse is a lofty task.

Each of the Quincy members carries influence in this regard, with Saudi Arabia and Qatar playing a particularly important role as regional powers with substantial economic resources. Riyadh certainly lost headway during the 2021 debacle and after the Sunni bloc’s Future Movement, its main political ally in the country, withdrew from politics. Yet its return to the Lebanese political scene in early 2022 led to a new joint development fund with France worth $30 million. It has since re-engaged Beirut, albeit to a lesser degree than in the past—a trend witnessed across the region as the Kingdom tightened its finances.

Meanwhile, Qatar was the only Gulf state to avoid criticism of Beirut in 2021, opting instead to purchase a 30 percent stake in Lebanon’s offshore gas fields and donate $60 million to the Lebanese Armed Forces (LAF). In this context, Doha has been a staunch supporter of neutrality across the region, particularly in Lebanon. Qatar played a major role in stabilizing Lebanon throughout its history; it helped rebuild multiple towns in southern Lebanon after Hezbollah’s 2006 war with Israel and sponsored the Lebanese National Dialogue Conference in 2008, producing the Doha Agreement that ended a similar but violent 18-month political crisis in the country. This year, it received official recognition from former president Aoun for its role in the maritime border demarcation negotiations in Israel. The Qatari government also called for Iran’s inclusion in talks on Lebanon as early as February—a necessity to resolve the country’s political ills.

For these reasons, Doha is particularly suited to bring Lebanon’s competing factions together for a deal. Whereas other Quincy members carry influence over specific groups needed for a deal, Qatar can play the crucial role of a neutral mediator far more effective than any of the other stakeholders. For this reason, Saudi Arabia will likely play a major, but nonetheless decreased, role in the Lebanese parliament. To be sure, Riyadh has developed a relationship with the Lebanese Forces (LF) party, a major Christian party with strong anti-Hezbollah views, and other Sunni MPs, and can use this to get some of the Christian and Sunni vote on board. However, the major role that Riyadh will play in the negotiations will be its ability to work with Iran, through their recent détente, to get the latter’s buy-in and push Hezbollah away from its current position as well.

Such an outcome would be a massive success for the Saudi-Iranian deal brokered by the Chinese. At present, Hezbollah appears to have overstepped its hand, opting to keep the state in turmoil with the hopes of international actors choosing to bail out the country once again without any serious reforms—a bailout that Hezbollah would disproportionately benefit from. However, this outcome feels unlikely this time around, leaving room for the Saudis and Iranians to discuss a deal that gets Hezbollah and the LF—two of the biggest political parties in the current parliament—and their voting blocs on board.

The difficulty ahead will be in finding a deal that carries regional connections to other zones of competition between Iran and Saudi Arabia, such as Yemen or Syria. At the same time, the deal must shake up Lebanon’s system without pushing away traditional parties—an outcome that has yet to be seen in Lebanon.

The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views of Gulf International Forum.

Issue: Geopolitics
Country: GCC

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