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Iran’s nuclear issue and Lebanon’s economic crisis

Badih Younes

Published: Updated:

At no point in modern history has Lebanon been free of corruption, bribery, and dealings, and no point, either, has it been a state with a plan and a vision based on citizenship. It has navigated a raging sea of regional and international political changes; corruption, favoritism, and shadowy dealings are nothing new. Other elements have changed, however, and brought the country to its current state.

Starting in 2005, Hezbollah has ruled Lebanon via political agreements (2006), assassinations (2005-2021), or the invasion of the capital Beirut in 2008. But between 2005 and 2018, Lebanon managed to stay afloat, subsisting on small stops and starts. From time to time, a lapse in security shocked the system, followed by stability, then tourism, and “some hope.” All of that ended in 2018, however, and the decline continued all the way to collapse. Why? And who is responsible?

With the return of US sanctions on Iran in 2018, and following the United States’ withdrawal from the nuclear agreement, Tehran and its proxies suffered unprecedented dire economic straits. At a time when 80% of Iranians are languishing in poverty due to the expansionist activities of its regime, which billions of dollars spent on militias, these proxies must have had to continue playing their roles on this basis: “We gave you power. Use it to survive and continue…and be ready to provide us with what we need during this stage.”

Hezbollah was receiving about $800 million annually from Iran (according to credible local and Western reports). Its leader, Hassan Nasrallah, said in one of his religious addresses, “As long as Iran is fine, we are fine, our money comes from there...Our food, drink, arms and the salaries of our warriors comes from the Islamic Republic of Iran.”

But many missed the implication of this statement: “As long as Iran is fine.” But the Iranian regime itself knows that it is not fine. Nasrallah had to bear the responsibility at this stage and maintain Hezbollah under these delicate circumstances, providing Tehran with what it needs. From here it all started to become, openly, at the expense of the Lebanese people. When the “black economy” existed simultaneously to the state’s, the Lebanese turned a blind eye to what was happening at unofficial crossings, the seaport, the airport, and in the legal and illicit trading on which the party relies. After 2018, interests began going into conflict, and the black economy had to start draining the official economy, even at the price of burying Lebanon’s economy as a whole.

Hezbollah, like all military organizations that subsist on wars, was affected by the Iranian shortage. In fact, Iran asked Hezbollah to provide it with foreign as well as rare currency (like US dollars) after 2018.

The black economy includes social institutions, such as the Martyrs Foundation, Islamic Charitable Emdad Committee, contracting and infrastructure works companies, plus consumer cooperatives, industrial rubber manufacturers and automobile trade. Perhaps the most prominent indicator in the parallel economy for Hezbollah is the al-Qard al-Hassan Association, which has become more like a central bank for the party’s financial system. In addition to public utilities (the airport, seaport, and land crossings), smuggling through illegal crossings contributed to supporting Hezbollah’s parallel economy, which deprived the Lebanese treasury of customs revenues and drained the Banque du Liban reserve of hard currencies, because most contraband goods, such as fuel and wheat, are subsidized by the central bank, according to the official exchange rate of the lira against the dollar ($1= 1,515 Lebanese liras). This is the tip of the iceberg that every Lebanese knows, and we will not expound on this point. However, Hezbollah, especially after 2018, did not only seek to make-up for what it did not receive from Iran, but went on to even support the Iranian regime with its requirements at the expense of the Lebanese people.

Hezbollah proposed importing fuels from Iran—and overseeing the relevant operational details—not to save the Lebanese, but to sell fuels in the local currency to buy available dollars in the domestic market and send them back to Tehran, even if that might raise the exchange rate of the dollar in Lebanon to uncapped levels. Selling Iranian oil for dollars is not Tehran’s only requirement. Hezbollah imports medicines and medical equipment from Iran to sell, injecting proceeds in dollars for the benefit of the Revolutionary Guard.

From the airport to the seaport and the crossings, a policy of strategic economic resilience with Tehran continues. When Lebanon reclaimed investment in the port of Beirut from Ottoman and French companies, and incurred billions of dollars to restore the port Lebanese public ownership, Hezbollah gave the IRGC free reign in the port and smuggled all kinds of merchandise from it without paying due taxes and duties. Hezbollah was not satisfied with the billions it earned, but went on to stockpile stored missiles, weapons and nitrates in the port’s warehouses, which led to the destruction of half of the capital Beirut, leaving it in ruins, devastated and empty (the August 4 explosion).

After the re-imposition of sanctions, focus was put on a banking system parallel to that of Lebanese banks, through which Hezbollah could buy dollars and gold in exchange for Lebanese currency. Nasrallah announced that the al-Qard al-Hassan Association had traded in $2 billion dollars in recent years. Thus, Hezbollah seized a financial network comprising al-Qard al-Hassan and money exchange offices to collect dollars and send them overland to the Iranian embassy in Syria.

Added to the aforementioned examples is Hezbollah’s control over the communications network after extending its own network—which did not hesitate to occupy Beirut on May 7, 2008 in order to protect this network—through which it manages its external communications, collects proceeds from its bills, and pumps some money back to the mullahs’ regime under the pretext of battlefield unity and solidarity with Tehran.

In conclusion, Hezbollah, and Iran behind it, have led Lebanon to a precipice that hinges on US-Iranian negotiations. If Washington and Tehran agree (as in between 2003 and 2015), Hezbollah takes the country’s helm politically, and if they disagree (as in 2018), the Lebanese people pay the price economically, as Hezbollah will choose, as always, its continued existence and Tehran’s interests at the expense of the Lebanese people—even at the price of starving them—as is the case today.

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Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.