Perspectives - December 4, 2020

Hezbollah Announces Lawsuit Related to Port of Beirut Explosion

Hezbollah announced on Friday that it is suing a former Christian lawmaker Fares Souaid and a website affiliated with the Lebanese Forces political party for defamation, after they accused the group of complicity in the explosion at the Port of Beirut this summer. Hezbollah’s legal representative also announced that he would bring charges against the brother of Prime Minister-designate Saad Hariri.

Western Officials Eyeing Lebanon’s Central Bank’s Ties to Hezbollah

According to the Wall Street Journal, U.S. and other Western financial-enforcement and diplomatic officials are exerting pressure on Lebanon’s Central Bank as part of an international push to sideline Iran-backed Hezbollah, oppose corruption, and alleviate the country’s economic and political crises. Washington and its allies for months have demanded a forensic audit of the Central Bank that they believe may uncover evidence of money laundering, corruption, and links to Hezbollah by top Lebanese officials.

Among those impeding the audit efforts, the officials said, are the Central Bank’s long-serving Governor Riad Salameh – traditionally considered a pro-Western official – and government regulators tied to Hezbollah, making them potential targets for sanctions by the U.S. and its allies. The officials say that although Salameh has closed some Hezbollah accounts at their request, the group’s reliable access to the financial system has helped it to flourish.

Lebanon Government Formation Appears Stalled

President Michel Aoun Thursday called for a greater role for the caretaker Cabinet in dealing with the country’s worsening economic conditions, in the clearest sign yet that formation of a new government is not close.

Prime Minister-designate Saad Hariri’s attempts to break the weekslong Cabinet stalemate have hit snags over the rival parties’ conflicting demands for key ministerial posts, in addition to rifts over the naming of Christian ministers.

Hariri was expected to meet Aoun this week to present him with a draft Cabinet lineup, but lingering differences over the naming of Christian ministers have raised fears of the proposed list being rejected by Aoun.

Lebanon has remained without a fully functioning government since caretaker Prime Minister Hassan Diab submitted his Cabinet’s resignation on Aug. 10 in the aftermath of the deadly explosion that devastated the Port of Beirut and wrecked large areas of the capital.

Donor Conference Held for Lebanon, But No Bailout Promised

France and the United Nations vowed Wednesday to keep providing humanitarian aid to Lebanon but urged the country's leaders to form a new government to implement long-overdue reforms deemed essential to releasing billions of dollars in promised international assistance for the cash-strapped country, which is teetering on the verge of a total economic collapse. It was the second aid conference for Lebanon since the port explosion.

French President Emmanuel Macron and U.N. Secretary-General Antonio Guterres announced the creation of a fund handled by the World Bank, the United Nations, and the European Union to provide support for Lebanon, including food, healthcare, education, and the reconstruction of the Port of Beirut.

The donors pledged the aid will be coordinated by the United Nations and delivered directly to the Lebanese people, in a clear rebuke of the country’s entrenched and notoriously corrupt leaders. The aid money is expected to go directly to NGOs and other organizations to distribute to the public, bypassing the Lebanese government.

France’s presidency also said on Wednesday that there would be no international financial support for Lebanon until there was a government in place and warned that an audit of the Central Bank was more urgent than ever.

Macron said he would visit Lebanon again later this month to urge Lebanese leaders to deliver on pledges they made to quickly form a new government when he met them on his second visit to Beirut on September 1, 2020.

World Bank Projects Lebanon Will be in Prolonged Depression

A report by the World Bank issued on Tuesday noted a deliberate lack of effective policy action by authorities has subjected the economy to an arduous and prolonged depression. The report, titled “The Deliberate Depression,” noted that Lebanon’s real GDP growth is projected to sharply decelerate to -19.2 percent in 2020, on the back of a -6.7 percent contraction in 2019. The World Bank also warned that poverty is likely to continue to worsen to engulf more than half of the population, and that Lebanon would witness increased flight of high skilled labor due to the country’s lack of economic opportunities, “constituting a permanent social and economic loss for the country.”

Lebanon-Israel Border Talks Postponed “For A Few Weeks”

The next round of indirect negotiations between Lebanon and Israel over the maritime border demarcation has been postponed, Lebanese officials said Monday. Israeli Energy Minister Yuval Steinitz confirmed the delay and said it had been agreed with the Americans that talks would be postponed for a few weeks. “In the interim, they will do some shuttling in order to better prepare the next round of talks,” he told Israel’s Army Radio, according to Reuters.

A Lebanese security source told Reuters that the reason for the delay was Israel’s rejection of Lebanese proposals, which Lebanese media outlets reported had become increasingly maximalist as talks continued. Lebanon’s delegation has pushed for an additional 1,430 square kilometers to be included in Lebanese territory on top of the already disputed 860 square kilometer area.

Meanwhile, Lebanese security sources claimed that Israel had installed a buoy to mark its control of the disputed area on the maritime border.

Lebanon Condemns Fakhrizadeh Killing

Lebanon’s Foreign Ministry Monday condemned the assassination of Mohsen Fakhrizadeh, an Iranian nuclear scientist involved in advancing Tehran’s past nuclear weapons program, and called for self-restraint to avoid a slide toward the “worst scenario.” Separately, a report from Israel’s Channel 13 suggested Hezbollah’s Secretary-General Hassan Nasrallah was cancelling movements and hunkering down after the assassination of Fakhrizadeh. This comes as Lebanese media has reported that the Commander of Iran’s Islamic Revolutionary Guard Corps’ Quds Force Esmail Ghaani visited Nasrallah in recent weeks, warning against provocations during the last weeks of the Trump administration.

Lebanon Continues to Struggle With Rising COVID-19 Cases

Lebanon registered 1,520 new coronavirus cases and 12 new deaths Thursday, as caretaker Health Minister Hamad Hasan warned that the country would not be able to cope with increasing cases.