Lebanon: Awaiting Gulf support

Ahmed Mustafa , Thursday 23 Jan 2025

Overcoming the deep economic crisis in Lebanon requires foreign assistance, but the oil-rich countries of the Gulf are cautious about providing it

Awaiting Gulf support
Lebanon, destroyed by Israeli air strikes, waits for contribution by the Gulf to rebuild their nation

 

Lebanon is looking forward to bolstering itself up with the arrival of a new president and prime minister after a few years of void official leadership. The new President Joseph Aoun, former army commander, and new PM Nawaf Salam, head of the International Court of Justice, are both outsiders to the traditional political class that has ruled Lebanon for decades.

The country has been in deep crisis since the financial meltdown of 2019, compounded last year by a war that lasted over a year between Hizbullah and Israel, which ended with a two-month ceasefire last month. The international community and Gulf countries had refrained from extending any financial help to Lebanon in recent years, citing corruption and political paralysis.

In his first speech, after winning majority support for his nomination in parliament, Salam said his priorities were be to rebuild the infrastructure destroyed by a yearlong war with Israel and to work on pulling the small nation out of its historic economic meltdown. He also vowed not to exclude any party from the political process.

For the last six years, Lebanese banks have been barely functional, while electricity services are almost entirely in the hands of the owners of private diesel-run generator and fuel suppliers. More than six million Lebanese people, along with almost a million Syrian refugees in the country, live in drastic conditions.

Last month, a World Bank report drew a bleak picture of the economic situation in Lebanon. Lebanon’s Gross Domestic Product (GDP) shrank by more than six per cent last year (2024). The economy has been cut by more than a third since the 2019 crisis. National debt is ballooning, reaching almost 50 billion dollars. Remittances from Lebanese expatriates, especially those in the Gulf, which stood at over four billion dollars annually, are declining. Some Gulf countries have been cutting the number of Lebanese workers there in the last few years, concerned that they serve the interests of Iran-backed Hizbullah.

Besides all this, the country needs tens more billions of dollars to rebuild infrastructure and services destroyed either by the war with Israel or by other disasters like the explosion of the Beirut Port more than four years ago.

Almost a decade ago, only negligible humanitarian aid reached Lebanon, notably from Saudi Arabia and UAE during the war last year. Almost a decade ago, Gulf countries stopped investing in Lebanon and withdrew billions of deposits from Lebanese banks that helped keep it afloat. Even wealthy Gulf citizens were less interested in buying luxury properties in Lebanon. In addition to all this, tourism suffered a major blow.

Just before Lebanon’s financial meltdown, a senior Emirati official said in an off-the-record briefing I attended that the UAE and the rest of the GCC countries are fed-up with Lebanon. “Everything is frozen; we can’t pour money into corruption,” he said then, talking of frustration with “people and parties we relied not being able to deliver anything they promise”. It was no secret that some Gulf countries, wary of Hizbullah and the Iranian sway over Lebanon, supported and financed anti-Hizbullah political figures and groups to no avail.

According to figures of the Arab Monetary Fund, GCC states have been the main aid donors to Lebanon over the past three decades. The funds report of 2023 showed that the Gulf gave more than half the 17 billion dollars in development aid Lebanon received between 1990 and 2020.

Like the wider Arab world and the international community, Gulf countries expressed optimism at the new developments in the country. Yet the new government in Beirut faces the daunting task of convincing the outside world of its worthiness.

Saudi Arabia and Kuwait have signalled their readiness to financially support the reconstruction of Lebanon after the brutal Israeli war on the country, as the Lebanese daily newspaper Al-Akhbar reported last week. It seemed to be a cautious overture, implying that Gulf countries will not simply repeat their previous approach but will extend help more selectively.

The report said: “Senior officials in Saudi Arabia and Kuwait expressed, on the sidelines of international financial meetings, the two countries’ readiness to provide aid to Lebanon to bear the burden of the reconstruction of what was destroyed by the Israeli aggression on Lebanon.” There is a condition attached to this financial assistance, however: it will be “exclusively through the Lebanese state, and through a legal mechanism irrespective from political calculations in Lebanon”.

It is still unclear how to avoid political calculations in a country infested with polarisation and factional frictions. Even though the collapse of the Syrian regime, which backed certain factions in Lebanon, and Iran suffering heavy losses in terms of its influence in the region might be reasons for hope, old-guard politicians remain in the picture.

Some in Lebanon are optimistic about the Gulf’s anticipated support. The chairman of the Beirut-based Lebanon-GCC Economic Development Agency, Elie Rizk, was quoted by the media as saying, “the GCC countries want to see a new Lebanon, not a new Sudan hit by wars and divisions. That is what I have been told during our meetings in Saudi Arabia… I can tell you that these countries are fed up with dealing with individuals and parties. Today they want to work with the Lebanese state and its official institutions, not with separate factions.”

But as a report by Arab Gulf Business Insights notes, resumption of badly needed GCC financial aid to Lebanon may take time, even though most Gulf countries have given their blessing to the new Lebanese president and PM. There may be more considerations to the issue. As a Dubai-based observer told Al-Ahram Weekly, aside from Lebanon, there are increasing calls for aid from Syria and other countries. The Gulf countries have to set their priorities regarding whom and how much to help financially.

* A version of this article appears in print in the 23 January, 2025 edition of Al-Ahram Weekly

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