Bankrupt and exposed, Hezbollah has no answers for Lebanese

Elie Fawaz

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The protests in Lebanon, which erupted in October over a proposal to tax calls on the WhatsApp service, are, in contrast to the so-called Cedar Revolution of 2005, primarily economic in nature. But the economic grievance has channeled the people’s anger at Lebanon’s political system. For the first time, the Lebanese are blaming the sectarian system for the social, financial and economic crises they are experiencing.

The protest slogan “all of them means all of them” — a reference to Lebanon’s sectarian political leaders — expresses people’s distrust in and exasperation with the political class. For thirty years, the Lebanese have been deprived of basic services like electricity and clean water, waste management, reliable infrastructure, and a sound economy. Instead they find themselves broke, impoverished and ripped off by a corrupt, predatory political class that was using state funds to enrich itself and solidify its narrow support base.

This cross-sectarian, cross-regional disaffection with the sectarian system sounded the alarm for the most powerful actor in that system: Hezbollah. In fact, following the withdrawal of Syrian forces in 2005, Hezbollah has come to dominate the Lebanese political system. It quickly understood that the protests against the system posed a direct threat to its control.

Hezbollah’s control of Lebanese politics is attributable to certain key factors. First is the group’s military power, which it employs throughout the region, namely in Syria, Iraq and Yemen. It has leveraged this military power in Lebanon as well. On May 7, 2008, for example, Hezbollah fighters captured sections of west Beirut and attacked its domestic rivals in clashes that killed 62 people across the country. The fighting ended with a Qatari-negotiated agreement that gave Hezbollah veto power in a new national-unity government.

Hezbollah’s military supremacy in Lebanon is evident first and foremost in that it alone holds the decision to wage war against Israel. To that end, it has dug several cross-border attack tunnels from southern Lebanon into Israel. It has also allegedly established several facilities to assemble precision-guided missiles with Iranian supervision. In addition, it freely transports heavy equipment and fighters from Lebanon across the border to prosecute its wars in Syria and beyond.

The second factor is economic and financial. US sanctions on Hezbollah’s illicit financial activity have had an impact on Lebanon in that they revealed that the bubble Lebanon enjoyed for some years was largely the result of money laundering by Hezbollah and its business associates. We now know that Hezbollah was laundering up to two hundred million dollars a month through the Lebanese Canadian Bank, which the US Treasury Department sanctioned in 2011. This money laundering scheme spurred the construction boom of luxury residential towers in Beirut, with unjustified square meter prices rivaling those in New York. This scheme helped increase the gains of the banking sector by billions of dollars a year. Even though the result was a dramatic slowdown in growth, this artificial economy based on money laundering activities gave Hezbollah unmatched economic power.

This economic power extended to the micro-level. Because of the protection they enjoyed from the party, Hezbollah business associates were able to bring in to the country products, from home appliances to cellular phones and construction materials, without paying taxes and fees. This allowed them to sell below market price, making it almost impossible to compete with them.

The government and its agencies were not simply unable but also unwilling to stop Hezbollah from conducting these illicit activities. Rather, they were complicit. Everyone was benefiting one way or another from the Hezbollah-controlled status quo.

Today, Hezbollah is at an impasse. US sanctions targeting Hezbollah’s criminal and illicit financial empire from Latin America to Africa, coupled with a maximum pressure campaign on Iran, are taking a heavy toll on the group’s purse. The Lebanese economy has effectively collapsed because it has always counted on the artificial bubble created by Hezbollah’s illegal activities, for which Lebanon serves as a center. The state has no more funds and the world is watching as everything crumbles, demanding serious reforms before considering any financial aid.

According to some local statistics, 160,000 employees have either lost their jobs or are being paid half salary since the start of the crisis. Inflation has risen considerably, and the Lebanese pound has so far lost a third of its value to the dollar. Remittances, a main sources of capital inflow, have dropped significantly due to lack of confidence in the banking sector. The number of protesters is expected to grow in the coming months.

If it has been relatively easy for Hezbollah to control the Lebanese state and political system, it might prove much harder for it to control the street and the protesters. Resorting to violence, although an option, will most likely increase the possibility of civil war, something the party probably wants to avoid, as it will weaken its geopolitical position considerably. Meanwhile, accepting the terms of the protesters in imposing transparency, accountability, an end to corruption and the recovery of funds stolen by politicians would mean an end of the political system as it exists, and which Hezbollah controls.

The future is uncertain for Lebanon. But one thing is certain: the Lebanon that emerges from this tunnel will be different.

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