Proteste in Libano (La Presse)

Economic Death Spiral Makes Lebanon Look to Iran For Help

Lebanon’s economic problems are a byproduct of Washington’s maximum pressure campaign on Iran, and could in fact drive the the two Middle Eastern states closer together. Inaction from the US, derived from an unwillingness to support governments it views as adversaries, has left Lebanon with virtually no other options, particularly as the International Monetary Fund is conditioning aid on the strict oversight of Beirut’s government and Hezbollah.

Maximum Pressure Creates Shared Problems

While Iran faces its own similar struggles that seem to compound daily, it is close enough to assist Lebanon, as Ali Hashem wrote for Foreign Policy. Unlike Venezuela, which Tehran tried to sell gasoline to, Beirut is both nearby and predominantly Shi’ite. The two states have a lot in common, thanks in part to Iran’s support of Hezbollah.

They are also both victims of the Trump administration’s maximum pressure campaign which has claimed Lebanon as a casualty. US Secretary of State Mike Pompeo has also worsened the situation by barring Iran from offloading oil to Lebanon.

How Much Could Iran Help Lebanon?

Although Tehran is sanctioned by the US government, its proxy network would prove much harder to suffocate. Hezbollah could act as an intermediary to shuffle resources between borders, thereby facilitating the direly needed economic assistance for Beirut.

To make matters easier for Lebanon, Iran is accepting payment in Lebanese pounds due to its usefulness in funding Hezbollah. Joel Rayburn, US deputy assistant secretary at the Center for Global Policy, dismissed the idea, citing Iran’s lack of resources and present financial predicament as its inability to provide assistance to Lebanon.

Shi’ite Bond

However, Iran coming to Lebanon’s rescue would live up to some of Tehran’s past promises that all Beirut needs to do is ask and help will arrive. A quick dismissal of Iran’s power to scrape together a life support system for Lebanon could end up being foolish. Furthermore, such a hasty assessment with a focus on quantitative data ignores the full nature and scope of the Iran–Lebanon relationship.

Is it even possible to calculate the value of the Shi’ite bond? In a turbulent region such as the Middle East, religious ties factor heavily into decisions.

“What the U.S. government has failed to grasp over the past four decades of its fight with Iran in a country like Lebanon is the fact that Iranian influence was bred organically in areas where Shiites are a majority,” Hashem wrote.

That framework is foreign to Washington. As Hashem also noted, the Lebanese civil war wasn’t even capable of turning it away from Iran-backed Hezbollah. The reality is that decades of Iran exerting its Shiite influence has left Lebanon isolated on the global stage. There are few allies it could consider appealing to for help; Iran is all that is left for surefire support.

In early July, Hezbollah announced it had begun discussions with the Lebanese government about a possible trade deal with Iran, as Reuters reported.

“We started a discussion…to see where this option can go,” said Sayyed Hassan Nasrallah, leader of Hezbollah. “This track is moving … What’s the result going to be? I don’t know. But we have to try.”

Chinese Option

Another possible solution to Lebanon’s woes is seeking help from China, as Radio Farda reported. Tehran has already inked a deal with Beijing and Beirut could soon follow. Nasrallah has trumpeted the idea of a Chinese bailout since June.

“Chinese companies are ready to inject money into this country,” he said in a televised speech. “If this happened, it would bring money to the country, bring investment, create job opportunities, allow heavy transport, and so on.”

Although Lebanon is considered a friend of the US and receives American aid, Hezbollah is another matter entirely. While Washington would be an ideal benefactor to assist Lebanon, Hezbollah’s control over the government makes it an impossibility. As the group continues to be branded a terrorist organisation, its ties to Prime Minister Hassan Diab means the US is not an option for support.

Therefore, Beirut is looking to Tehran and Beijing. America and international institutions like the IMF have left no other choices. Lebanon witnesses the collapse transpiring in Iran and Venezuela—why should it let itself fall into a similar state of ruin when it is free to seek outside help? 

Accepting aid from either would surely have the US rethinking the aid it provides, however. Officials from Washington have already warned as such. It may have no choice, though, and the deal would be a benefit for Beijing if it includes access to the Port of Tripoli, which would act as an important cog in the Belt and Road Initiative.

The US maximum pressure campaign on Iran, while effective, has also served to foster more opposition in other states such as Lebanon. The worse the situation becomes, the more likely it is that the coordination between the two increases as they struggle to survive.