1 00:00:00,600 --> 00:00:05,340 Hello and welcome to Almanack. The Oxford Middle East podcast. My name is Filters Focus. 2 00:00:05,340 --> 00:00:08,790 And today I'm joined by Felix Walker and Michael tomorrow to discuss the ongoing and 3 00:00:08,790 --> 00:00:13,380 interlocking crisis in Lebanon because of the drawbacks of the confessional system, 4 00:00:13,380 --> 00:00:20,200 the importance of foreign actors, the economic crisis, and why all these problems are so difficult to say. 5 00:00:20,200 --> 00:00:26,170 The entire Lebanese government has stood down after Tuesday's catastrophic explosion in Beirut. 6 00:00:26,170 --> 00:00:31,510 Some Lebanese would joke that they can't tell the difference between when they have a government and when they don't have a government. 7 00:00:31,510 --> 00:00:36,900 The state has to observe the people's life here. But the government is not in the mood. 8 00:00:36,900 --> 00:00:39,720 You don't see something else in short supply. 9 00:00:39,720 --> 00:00:48,720 Is faith in the power of the Lebanese state such as it is to get the virus or anything else under control? 10 00:00:48,720 --> 00:00:57,580 So as you can see, some people from the from the government here and they just do nothing, doesn't fix things like we do. 11 00:00:57,580 --> 00:01:02,970 Evolution doesn't tell me it's a more aggressive at one time either. 12 00:01:02,970 --> 00:01:13,100 So what can we do? I mean, at the moment. Welcome, ladies and gentlemen, to our episode on Lebanon. 13 00:01:13,100 --> 00:01:19,340 We're going to solve the episode by giving a short overview of the situation now so that Felix is going to explain the confessional list framework. 14 00:01:19,340 --> 00:01:24,800 At the moment, Lebanon has had what might be some of the worst years in his history. 15 00:01:24,800 --> 00:01:29,330 It's facing political deadlock. Its caretaker prime minister has been a caretaker since August. 16 00:01:29,330 --> 00:01:37,480 His replacement quit after only a month. At the moment, it seems unlikely that the new government will be formed due to ministerial turf puzzles. 17 00:01:37,480 --> 00:01:41,630 There have also been ongoing protests which started back in October twenty nineteen against higher 18 00:01:41,630 --> 00:01:48,800 taxes and now envelop everything from taxes to political transformations to representation. 19 00:01:48,800 --> 00:01:56,720 Also covered as rampaging through the country. January 20 21 has been the deadliest month for covered in Lebanon since the pandemic began. 20 00:01:56,720 --> 00:02:04,370 The country is also dealing with millions of Syrian refugees who put enormous strain on the health care system and also increasing debt, 21 00:02:04,370 --> 00:02:10,580 very high inflation and in general and the economic collapse due to two sources of income being tourism and services, 22 00:02:10,580 --> 00:02:15,080 have been extremely hard hit by the Korona murders. But as I mentioned, there's been political deadlock, 23 00:02:15,080 --> 00:02:21,830 and that is something you cannot understand without understanding the confessional system which defines Lebanese politics. 24 00:02:21,830 --> 00:02:25,460 So, Felix, would you want to get into that? Yeah, sure. 25 00:02:25,460 --> 00:02:29,120 The political system of Lebanon is basically a compassionate system. 26 00:02:29,120 --> 00:02:34,550 Lebanon is very diverse, diverse country in the Middle East with 19 different religious communities. 27 00:02:34,550 --> 00:02:43,040 And this compassionate system was basically put in place in night in 1943 during what they call the national pact, 28 00:02:43,040 --> 00:02:46,970 in which in order to avoid having one group dominating or others, 29 00:02:46,970 --> 00:02:54,500 they had an unwritten agreement which laid the foundation of Lebanon as a multi confessional, independent state. 30 00:02:54,500 --> 00:03:02,880 And it was basically an agreement between the then president Bishara and Haughty, who was a Christian, Maronite Christian, and the prime minister. 31 00:03:02,880 --> 00:03:10,220 He had a son who was a Sunni Muslim. What they got out of that was the Maronite Christians would not seek any more Western intervention. 32 00:03:10,220 --> 00:03:18,590 And the Muslims would abandon their aspirations to unite with Syria. So the system works basically with based on the census back in 1943. 33 00:03:18,590 --> 00:03:22,340 The president has to be a man, Maronite, Catholic, Christian. 34 00:03:22,340 --> 00:03:26,570 The prime minister has to be a Sunni Muslim. Speaker of parliament has to be a Shia Muslim. 35 00:03:26,570 --> 00:03:34,070 The chief of the general staff of the armed forces has to be a Druze back in the day because it was more in favour of the Christians, 36 00:03:34,070 --> 00:03:37,730 because they were larger. They had the larger portion of the population. 37 00:03:37,730 --> 00:03:43,070 But since after the civil war, which ended in 1989 with the 28th agreement with Saudi Arabia, 38 00:03:43,070 --> 00:03:51,680 they changed the ratio to 50 percent Christians and 50 percent Muslims in parliament because the portion of the population had changed over time. 39 00:03:51,680 --> 00:03:56,570 And currently there are two big political alliances composed of parties from different sects. 40 00:03:56,570 --> 00:04:05,060 There is the March 14 bloc, which is a combination of Sunni and Druze parties and the March eight bloc, 41 00:04:05,060 --> 00:04:10,770 which is a combination of Christian and Shia parties, including Hezbollah. 42 00:04:10,770 --> 00:04:14,000 What is the current population like? Division like? Is it. 43 00:04:14,000 --> 00:04:19,430 So does the Parliament sort of reflect the demographic realities of the country? 44 00:04:19,430 --> 00:04:25,220 To be honest, like I said back in the past, the Christians have the the advantage because they were a larger population. 45 00:04:25,220 --> 00:04:32,270 But over time, a lot of Christians left because it was easier for them to leave compared to the Muslim population. 46 00:04:32,270 --> 00:04:37,610 But also the Muslim population grew because they were the poorer population at the beginning. 47 00:04:37,610 --> 00:04:47,660 And also they gained in in not just in numbers, but also in financial and political power, which led to that change in 1989 with the type agreement. 48 00:04:47,660 --> 00:04:55,240 But since then, there has been population changes. And I mean, I think there is an unwillingness to. 49 00:04:55,240 --> 00:04:58,930 Do a new census in Lebanon, because that may create some problems, 50 00:04:58,930 --> 00:05:03,970 because that would probably have to mean that some rearranging would have to be done in the political system. 51 00:05:03,970 --> 00:05:09,350 But it seems like the Muslims do have a majority of the population. 52 00:05:09,350 --> 00:05:14,420 But I'm unsure of the exact so there hasn't been a census since 1989. 53 00:05:14,420 --> 00:05:21,890 The last official census in Lebanon was performed in 1932. So it's 90. 54 00:05:21,890 --> 00:05:25,860 Eighty million years old. Holy crap. 55 00:05:25,860 --> 00:05:29,910 But but it seems like basically the the missing. 56 00:05:29,910 --> 00:05:37,980 I mean, there were a lot of reasons behind the civil war. Right. But one of the big reasons was that the Christian population was diminishing. 57 00:05:37,980 --> 00:05:45,750 And the remainder of the population being being Muslims and Jews felt that the apportioning 58 00:05:45,750 --> 00:05:54,660 of power was not representative of the actual number of people of each sect in the country. 59 00:05:54,660 --> 00:06:00,610 And so tensions rose. The civil war happens. And that's why in 1989, they kind of recalibrated that. 60 00:06:00,610 --> 00:06:07,170 That remains an issue in Lebanon. That's putting it lightly because related to that is also the role of foreign actors, 61 00:06:07,170 --> 00:06:15,030 because it is a blow and has to some extent become a football field for the other powers in the region, too, to settle the differences. 62 00:06:15,030 --> 00:06:21,690 You know, most famously amongst those groups is Hezbollah, which receives a lot of support from Syria and Iran. 63 00:06:21,690 --> 00:06:26,320 Obviously, Israel, for safety reasons, also has a lot of interest in in Lebanon. 64 00:06:26,320 --> 00:06:28,940 But do you want to go a bit further into that, Michael? 65 00:06:28,940 --> 00:06:41,020 So, yes, Iran is certainly watching developments in Lebanon closely and is very wary of of losing any of its hard won influenced Visa v, 66 00:06:41,020 --> 00:06:55,510 its proxy, Hezbollah. And as far as Iran is concerned, Lebanon and Syria are spaces for it to put pressure on Israel and the United States. 67 00:06:55,510 --> 00:07:10,330 Now, there has been a lot of growing criticism of both Hezbollah and Iran, particularly since the 2019 protests and more recently the port incident. 68 00:07:10,330 --> 00:07:19,450 There was a lot of fury online within Lebanon in early January after a statue of assassinated Iranian 69 00:07:19,450 --> 00:07:27,760 General Awesomes Soleimani appeared in the Hezbollah stronghold of Obeidi in southern Beirut. 70 00:07:27,760 --> 00:07:40,850 And many Sunni and Christian politicians were condemning recent remarks by Iran's Islamic Revolutionary Guard Corps Air Force commander Ameer Ali. 71 00:07:40,850 --> 00:07:47,830 Haji's out there who claimed in early January that Lebanon owed its missile capabilities 72 00:07:47,830 --> 00:07:55,060 to Iran and that Lebanon was in the front line in Iran's fight against Israel. 73 00:07:55,060 --> 00:08:06,610 So for Iran, Lebanon is certainly another environment from which it can project its its regional influence and 74 00:08:06,610 --> 00:08:16,480 perhaps even implement its forward defence strategy that is core to its national security strategy. 75 00:08:16,480 --> 00:08:22,600 Now, four other actors in the region, Saudi Arabia, 76 00:08:22,600 --> 00:08:33,730 has always been regarded as the main protector of Lebanon's Sunni Arabs and has historically enjoyed huge sway over the politics of the country. 77 00:08:33,730 --> 00:08:44,380 However, that has changed, particularly since the abduction and resignation of Saad Hariri in 2017, 78 00:08:44,380 --> 00:08:50,530 which most observers believe wasn't done because of the Saudis. 79 00:08:50,530 --> 00:09:01,180 The Gulf states, which once funnelled funds into Lebanon, have grown wary in recent years, 80 00:09:01,180 --> 00:09:18,670 and particularly they are alarmed by the rising influence of Hezbollah, especially as their wariness to the perceived threat of Iran regionally grows. 81 00:09:18,670 --> 00:09:28,090 And they realise that neither the Lebanese state nor politicians such as Hariri that they count 82 00:09:28,090 --> 00:09:35,170 close to them can do much about Hezbollah's activities and domestic influence in Lebanon. 83 00:09:35,170 --> 00:09:46,900 Now, that being said, they still provide some relief and are are willing to engage with the country not to give up all of their influence. 84 00:09:46,900 --> 00:09:55,280 So we do see amongst regional actors this using Lebanon as a. 85 00:09:55,280 --> 00:10:03,950 Another front with which to fight their, you know, their own personal conflicts with each other. 86 00:10:03,950 --> 00:10:10,020 You also think that the support which Saudi Arabia, for example, gives to Lebanon will be conditioned on, 87 00:10:10,020 --> 00:10:14,700 for example, being exclusionary towards potential Hezbollah affiliates? 88 00:10:14,700 --> 00:10:19,570 Or do you think they'll be kind enough to let anyone benefit from the support? 89 00:10:19,570 --> 00:10:31,540 That's hard to say. There is a tendency amongst regional actors in the Middle East to pursue a zero sum strategy. 90 00:10:31,540 --> 00:10:35,710 But this is very ineffective. 91 00:10:35,710 --> 00:10:50,950 I can't imagine any actor asking the Lebanese government to not include Hezbollah and its allies in any government scheme or structure. 92 00:10:50,950 --> 00:10:53,260 And France knows this. 93 00:10:53,260 --> 00:11:06,850 And interestingly enough, this has been a source of contention between Macron and the U.S., particularly during the Trump administration. 94 00:11:06,850 --> 00:11:14,950 When he was secretary of state, Mike Pompeo made clear that Washington was not happy with Francis strategy to include 95 00:11:14,950 --> 00:11:20,230 Hezbollah in efforts to resolve the economic and political crisis in Lebanon. 96 00:11:20,230 --> 00:11:30,190 But France recognising the inextricable role that Hezbollah has in Lebanese politics and society. 97 00:11:30,190 --> 00:11:36,130 Has said that Hezbollah's elected arm has a legitimate political role to play. 98 00:11:36,130 --> 00:11:47,410 So we do see. This understanding by certain actors, particularly McCrone and France, that it's very hard, 99 00:11:47,410 --> 00:11:55,760 almost impossible to come up with any political arrangement that does not include Hezbollah. 100 00:11:55,760 --> 00:12:04,270 I would go further than that and say that it is impossible to have any political arrangement which doesn't include Hezbollah, because it is you know, 101 00:12:04,270 --> 00:12:12,300 I think it's safe to say the most powerful force in in Lebanon at the moment, especially concerning how well equipped this military is. 102 00:12:12,300 --> 00:12:19,570 And one one one thing about the Gulf situation is that a lot of Lebanese travelled to the Gulf and sent home remittances, 103 00:12:19,570 --> 00:12:23,770 which were a substantial part of the GDP in Lebanon. 104 00:12:23,770 --> 00:12:27,490 But due to the Coronado's pandemic, that has dried up. 105 00:12:27,490 --> 00:12:34,600 And I'll not get into the details of this, but the banking crisis in in Lebanon was also caused by lack of foreign reserves, 106 00:12:34,600 --> 00:12:37,390 which they would get through through remittances. 107 00:12:37,390 --> 00:12:45,460 And I just wanted to add concerning Hezbollah, not only did they garner support from the Shia consists constituencies within the country, 108 00:12:45,460 --> 00:12:54,040 but they also garner support from the other sects within Lebanon. And in August 2008, when a new cabinet came into power, 109 00:12:54,040 --> 00:13:01,210 this new cabinet unanimously approved a draught policy statement that recognises Hezbollah's existence not just as a political actor, 110 00:13:01,210 --> 00:13:04,810 but also as an armed organisation and guarantees its right. 111 00:13:04,810 --> 00:13:05,640 And I quote, 112 00:13:05,640 --> 00:13:14,560 to liberate or recover occupied lands such as the Shebaa Farms in southern Lebanon because these these lands would be recovered from from Israel. 113 00:13:14,560 --> 00:13:20,350 Right. Well, they're basically saying is Hezbollah would become Lebanon's military. 114 00:13:20,350 --> 00:13:28,180 I mean, and in a way, that was kind of the case, like in 2006, where basically there was a war between Israel and Hezbollah. 115 00:13:28,180 --> 00:13:35,770 Hezbollah is considered by most to have successfully fared in that in that in that conflict, 116 00:13:35,770 --> 00:13:47,200 at least in keeping the Israelis out of the country and inflicted actually the worst defeat Israel has ever had with an Arab force. 117 00:13:47,200 --> 00:13:53,400 And after that, they did gain a lot of support from from a lot of people within the country, not just from the Shia constituency. 118 00:13:53,400 --> 00:13:57,430 Their numbers of volunteers, for example, rose drastically after the conflict. 119 00:13:57,430 --> 00:14:02,420 And I think after that, they basically gain a certain respect within the country as an armed force. 120 00:14:02,420 --> 00:14:10,750 And yes, it is not the official army, but it's widely believed to be better armed and just more efficient than the Lebanese army itself, 121 00:14:10,750 --> 00:14:15,640 because the Lebanese within the Lebanese army divided according to sectarian lines. 122 00:14:15,640 --> 00:14:21,730 And that does affect its efficiency. The whole the whole country is divided along sectarian lines, Illouz institutionally. 123 00:14:21,730 --> 00:14:24,080 But I think later in this episode, 124 00:14:24,080 --> 00:14:31,660 it will become a lot clearer that most people have very similar priorities concerning what they're what they want and what they don't want, 125 00:14:31,660 --> 00:14:35,140 especially in their own government. Now, one of the things I don't want is, you know, 126 00:14:35,140 --> 00:14:44,440 the inefficiency of which comes from this whole extremely complicated political system where power is divided up between different religious groups, 127 00:14:44,440 --> 00:14:49,420 which in turn makes those religious groups very powerful. And the people who who leave those religious groups, 128 00:14:49,420 --> 00:14:56,110 that gives them both a lot of financial and economic power because bureaucracy, for example, becomes a tool for patronage. 129 00:14:56,110 --> 00:15:03,850 And it also does not change because of how extensive the interests of certain powerful people is to maintaining the bureaucracy. 130 00:15:03,850 --> 00:15:09,490 I mean, that's that's one of the main criticisms of this confessional system in Lebanon, is that, like you said, 131 00:15:09,490 --> 00:15:15,910 it breeds this system of patronage where government posts are guaranteed to all confessions and 132 00:15:15,910 --> 00:15:22,510 therefore they are not held accountable and they are free to dispense any patronage as they like. 133 00:15:22,510 --> 00:15:33,300 And this creates a certain dependency from the population that rely on their sectarian patrons for basic services such as education or health care. 134 00:15:33,300 --> 00:15:43,380 And I mean, this whole sectarian system seeps into every facet of life in the basketball league will have been infiltrated by this sectarian system. 135 00:15:43,380 --> 00:15:48,250 And as an illustration of what I'm saying, the bureaucracy of this country is completely bloated. 136 00:15:48,250 --> 00:15:50,620 You have four hundred thousand people employed by the public sector. 137 00:15:50,620 --> 00:15:57,610 For example, the National Train Service that's been defunct for decades and still has hundreds of staff on its payroll, 138 00:15:57,610 --> 00:16:02,290 which is just proof that people are I mean, 139 00:16:02,290 --> 00:16:08,020 due to the fact that they are desperate and the country finds itself in such a desperate economic situation. 140 00:16:08,020 --> 00:16:14,950 The only way for people to survive in the system is to become clients of this this patronage system, 141 00:16:14,950 --> 00:16:18,280 which is basically a vicious cycle and the worst country gets, 142 00:16:18,280 --> 00:16:25,820 the better it is for this sectarian system because it just forces people into their client patron system that they have. 143 00:16:25,820 --> 00:16:34,120 The corruption that exists basically invites a lack of accountability, a lack of transparency and really divide society along sectarian lines. 144 00:16:34,120 --> 00:16:39,610 That, in turn, fuels division and kills meritocracy. And breeds complacency. 145 00:16:39,610 --> 00:16:46,360 So if I can just reinforce what Felix is saying about how even the political 146 00:16:46,360 --> 00:16:56,200 system failing reinforces the power structures and elites within that system. 147 00:16:56,200 --> 00:17:07,870 When Lebanon's financial meltdown began in late 2008, 19 banks had to clamp down with capital controls. 148 00:17:07,870 --> 00:17:19,840 So this left a huge financial vacuum and stepping in where the state and financial institutions really failed. 149 00:17:19,840 --> 00:17:32,980 Hezbollah has provided ordinary Lebanese citizens with a vital lifeline through the Alapatt al-Hassan Association, which is one of its financial arms. 150 00:17:32,980 --> 00:17:45,190 So because citizens are cash strapped due to these capital controls allocated, Alhassan Association has been able to circumvent these measures. 151 00:17:45,190 --> 00:17:57,220 And anyone who look looking for a hard currency and liquidity has really relied on this financial arm of Hezbollah. 152 00:17:57,220 --> 00:18:03,760 It's able to offer people small interest free loans of up to 5000 dollars. 153 00:18:03,760 --> 00:18:10,420 And most importantly, these loans are given in dollars. 154 00:18:10,420 --> 00:18:16,810 Despite the fact that Hezbollah has been heavily sanctioned by the US, 155 00:18:16,810 --> 00:18:29,500 it's just another tool by which Hezbollah is able to further entrench its support amongst the country's population and not just Shiite population. 156 00:18:29,500 --> 00:18:35,720 Another good example of how deeply dysfunctional politics is can be expressed in the economic situation of the country, 157 00:18:35,720 --> 00:18:41,880 because, as I mentioned in the beginning, you know, there's serious inflation going on and the country is almost bankrupt. 158 00:18:41,880 --> 00:18:47,410 And the cause for that, like the long term, causes how Lebanon rebuilds itself. 159 00:18:47,410 --> 00:18:55,060 After the civil war, which ended in 1989, is really sad because the state would borrow a huge amount of money in order to fund construction. 160 00:18:55,060 --> 00:18:58,210 But a huge amount of it was lost in incorrupt deals. 161 00:18:58,210 --> 00:19:05,560 And it is estimated that since 2000, about 100 billion euros dollars has been lost in the banking system, 162 00:19:05,560 --> 00:19:15,920 probably, you know, in kickbacks to to the elite, to services that the government had to spend about 40 percent of its budget on simply paying off 163 00:19:15,920 --> 00:19:20,230 Durand's for them for the borrowing it had incurred sorry for the voters had incurred since then. 164 00:19:20,230 --> 00:19:27,400 In addition to that, as a number of systemic problems, one of them relates to electricity because electricity is heavily subsidised in Lebanon. 165 00:19:27,400 --> 00:19:30,940 And just like its census and everything else is an old Band-Aid fix, 166 00:19:30,940 --> 00:19:37,120 which hasn't been improved because electricity prices were based on oil prices from 1996. 167 00:19:37,120 --> 00:19:40,150 And obviously the oil prices have gone up since 1996. 168 00:19:40,150 --> 00:19:48,060 But because of that, these subsidies have had to fill in the gap and means that it's estimated that 40 percent of Lebanon's and tired. 169 00:19:48,060 --> 00:19:51,940 That is caused by that desire to subsidise electricity. 170 00:19:51,940 --> 00:19:57,280 And they can't stop doing so because of how reliant people in general are on electricity. 171 00:19:57,280 --> 00:20:03,340 You know, the need for lot fridges and either to cook and a steady supply of electricity has not existed since the end of the war. 172 00:20:03,340 --> 00:20:10,930 Instead, you have the so-called generator mafia where people pay others so that they can run illegal generators. 173 00:20:10,930 --> 00:20:16,480 And it is obviously a huge drain on the spending power, which means that instead of spending money on clothes and food, 174 00:20:16,480 --> 00:20:20,830 it goes into a corrupt system so people can show that they can't cook. 175 00:20:20,830 --> 00:20:28,270 They have to throw their food, which means a loaf gets even more expensive. And most of Lebanon only has electricity for two or three hours a day. 176 00:20:28,270 --> 00:20:34,980 It's gotten so bad recently, a plane trying to land on Beirut's airport could not land because there was no electricity for the landing lights. 177 00:20:34,980 --> 00:20:40,060 The traffic lights often don't work and traffic in Beirut was pretty awful anyway. 178 00:20:40,060 --> 00:20:46,370 You that was even worse. And surgeries can often not be done because the lights in hospitals cannot be kept on. 179 00:20:46,370 --> 00:20:51,880 You know, in addition to deliveries, the subsidies, the sorts of subsidies on food, medicine and fuel. 180 00:20:51,880 --> 00:20:58,060 But because the prices of these go up, because things have to be imported in Lebanon, because of how little air base itself. 181 00:20:58,060 --> 00:21:06,310 This is a huge drain on the on the government coffers. But an analyst said that lifting the subsidies would cause a social implosion. 182 00:21:06,310 --> 00:21:08,470 And the subsidies, as Felix said, 183 00:21:08,470 --> 00:21:15,190 also give political factions a huge amount of influence as they can control who gets subsidies and which sectors get subsidies. 184 00:21:15,190 --> 00:21:20,620 And it's unclear when the money will run out for the subsidies. But everybody seems to say it's going to happen next month. 185 00:21:20,620 --> 00:21:26,500 But as has been said for the last five or six months, so it's you know, it's anyone's guess when that will actually happen. 186 00:21:26,500 --> 00:21:30,880 The long term problems of this is unemployment, obviously, but also migration, 187 00:21:30,880 --> 00:21:37,700 because many young people try to leave the country where jobs are a major issue for the future if all the people educated. 188 00:21:37,700 --> 00:21:42,110 The worry is for many people that the combination of covered the political crisis, 189 00:21:42,110 --> 00:21:48,530 the financial crisis and the explosion in the book Ports of Beirut in August might destroy 190 00:21:48,530 --> 00:21:53,620 the middle class beyond repair and therefore seriously hamper the country's recovery. 191 00:21:53,620 --> 00:22:01,430 So in addition to these problems, their Lebanese plan has an inflation rate of above 100 per cent, meaning that every year it loses half its value. 192 00:22:01,430 --> 00:22:05,630 Lebanon has also been affected by American sanctions in other countries. 193 00:22:05,630 --> 00:22:09,780 Michael, you know more about that. Yes. So, of course, 194 00:22:09,780 --> 00:22:15,480 the major cause of instability and instability from the outset has been the monetary 195 00:22:15,480 --> 00:22:21,870 and fiscal policies of the government and the lending policies of the banking sector. 196 00:22:21,870 --> 00:22:33,280 However, U.S. sanctions on Lebanon, including secondary sanctions for banks knowingly facilitating Hezbollah, have. 197 00:22:33,280 --> 00:22:39,340 Undermine the stability of Lebanon's banking sector by creating what's called a 198 00:22:39,340 --> 00:22:48,010 chilling effect and thus reducing the inflow of foreign capital into Lebanon. 199 00:22:48,010 --> 00:22:53,410 There has been over the years a dramatic increase in. 200 00:22:53,410 --> 00:23:04,960 Sanctions related to Lebanon on the part of the US, and they mainly revolve around Hezbollah and the conflict in Syria. 201 00:23:04,960 --> 00:23:17,260 And in fact, of the over 260 targeted sanctions by the US that relate to Lebanon, over two hundred and twenty of them involve Hezbollah. 202 00:23:17,260 --> 00:23:24,370 And former Secretary of State Mike Pompeo explicitly stated that the Trump administration coupled 203 00:23:24,370 --> 00:23:34,270 Hezbollah and Iran in its sanction policy considerations and its maximum pressure campaign. 204 00:23:34,270 --> 00:23:43,660 An illustration of the effect that sanctions US sanctions can have on Lebanon is the following. 205 00:23:43,660 --> 00:23:55,990 The Trump administration sanctioned Jamal Trust Bank in August 2019, and it had to liquidate the following months. 206 00:23:55,990 --> 00:24:03,460 The Trump administration also signed the Hezbollah International Financing Prevention Amendments Act of 2018, 207 00:24:03,460 --> 00:24:10,210 which expanded on the powers of a previous act signed by the Obama administration, 208 00:24:10,210 --> 00:24:16,750 which first introduced the threat of secondary sanctions on banks accused with dealing with Hezbollah. 209 00:24:16,750 --> 00:24:26,740 U.S. financial pressure on the nine is far from negligible and has had a lot of consequences. 210 00:24:26,740 --> 00:24:38,230 And even disregarding Hezbollah sees her serious Civilian Protection Act has also negatively affected Lebanon. 211 00:24:38,230 --> 00:24:42,550 While that act was aimed to. 212 00:24:42,550 --> 00:24:56,950 Mainly to punish businesses that that interacted with the Syrian government because of the close ties that actors within Lebanon, 213 00:24:56,950 --> 00:25:00,820 particularly Hezbollah, have with us. 214 00:25:00,820 --> 00:25:12,280 The Assad government sees her act as another financial mechanism that has negatively affected Lebanon's financial sector. 215 00:25:12,280 --> 00:25:16,400 In there, in the politicians eyes or in the international community, the eyes, 216 00:25:16,400 --> 00:25:21,290 perhaps people are also to blame for the corruption and issues in the country because they keep on getting voted in. 217 00:25:21,290 --> 00:25:27,470 But obviously, one could say that the elections are rigged in the sense that there is no choice because it 218 00:25:27,470 --> 00:25:33,440 is practically impossible to have a party which runs on a non-professionals ticket to win. 219 00:25:33,440 --> 00:25:34,100 I mean, for example, 220 00:25:34,100 --> 00:25:42,260 the only person to have been able to do that was a billionaire called Halloumi who basic right to buy his way into joining the political elite. 221 00:25:42,260 --> 00:25:46,520 You know, the world basically champion the head of the central bank SAMU, 222 00:25:46,520 --> 00:25:52,190 who is now one of the most hated figures in Lebanon because it's revealed that while head of the central bank, 223 00:25:52,190 --> 00:25:58,940 he basically was completely corrupt and was perhaps involved in a Ponzi scheme and is now also being 224 00:25:58,940 --> 00:26:06,290 investigated for having he raided the coffers of the country and sent a lot of money to Switzerland. 225 00:26:06,290 --> 00:26:14,610 I can try to give, like a fifth grade version of what happened to the banks because it is a really weird idea. 226 00:26:14,610 --> 00:26:15,740 Like what? Yeah. 227 00:26:15,740 --> 00:26:26,090 During the 2008 financial crisis, he was hailed for doing an an exceptionally good job of saving Lebanon from the worst effects of it. 228 00:26:26,090 --> 00:26:36,440 And he was considered a fantastic, great banker. But in the last year or so, it's become clear that his way of banking was absolutely insane, 229 00:26:36,440 --> 00:26:44,960 because one of the prime reasons for the economic crisis in Lebanon right now is that the central bank 230 00:26:44,960 --> 00:26:51,680 required dollars to in order to buy things on the international market because of how much Lebanon imports. 231 00:26:51,680 --> 00:26:56,660 And the only way it could get that was by having very high interest rates on dollar deposits, 232 00:26:56,660 --> 00:27:01,850 which would make it appealing for foreign depositors to deposit the dollars into the country. 233 00:27:01,850 --> 00:27:07,360 It could only pay those interest rates by getting more dollars in the bank. 234 00:27:07,360 --> 00:27:13,630 In order to pay the principal plus interest and we'll get that from the banks within Lebanon. 235 00:27:13,630 --> 00:27:22,930 So what we would do is encourage Lebanese banks to deposit money into the central bank of Lebanon and then use that to pay off the debt, 236 00:27:22,930 --> 00:27:30,970 which he had to the other commercial banks in Lebanon. And they would then again, in turn, use that money and deposited in the central bank. 237 00:27:30,970 --> 00:27:38,200 And that worked for a while. And then when this collapsed, that's why we have the financial crisis and that's a Ponzi scheme. 238 00:27:38,200 --> 00:27:45,550 People talk about basically trying to make money out of nothing and that's sustainable until somebody realises how unsustainable the system is. 239 00:27:45,550 --> 00:27:51,580 On the other hand, though, the IMF has been trying to to improve the economic situation in Lebanon, 240 00:27:51,580 --> 00:27:54,160 but there has been a huge amount of resistance to it. 241 00:27:54,160 --> 00:28:00,790 For example, the IMF wants currency controls to ensure that money does not leave the country unless it has to. 242 00:28:00,790 --> 00:28:04,150 A number of rich people resist these currency controls because they want to move 243 00:28:04,150 --> 00:28:08,740 their money offshore while it's still possible to make sure it cannot be taxed, 244 00:28:08,740 --> 00:28:11,680 because IMF is also encouraging a so-called haircut's, 245 00:28:11,680 --> 00:28:18,000 which basically means that a lot of the very wealthy people look just lose a percentage of their money and they'll be used to pay off debts. 246 00:28:18,000 --> 00:28:22,760 No. MF also wants Hezbollah to give up the finance ministry. 247 00:28:22,760 --> 00:28:29,290 But because the finance ministry is possibly the most powerful ministry in Lebanon, Hezbollah, of course, does not want to do so. 248 00:28:29,290 --> 00:28:33,730 And this is, you know, as we mentioned in the beginning, one of the reasons for the political deadlock in a country that, 249 00:28:33,730 --> 00:28:38,490 like the patient ID systems are so deep that no one can can dislodge. 250 00:28:38,490 --> 00:28:40,900 So the fact that in late November, 251 00:28:40,900 --> 00:28:48,430 the central bank basic continued to obstruct the forensic audit that was led by an international restructuring consultancy. 252 00:28:48,430 --> 00:28:55,090 And they had to basically quit in desperation. So I think it was the completion of the audit, the central demand of international donors. 253 00:28:55,090 --> 00:28:59,020 Yeah, the donors and basically the IMF basically requested that an audit would be done. 254 00:28:59,020 --> 00:29:03,820 And the central bank obstructed it. So that's one of the reasons that you were talking about? 255 00:29:03,820 --> 00:29:10,150 No, I think I think the IMF was willing to give Lebanon a 10 billion dollar loan if they implemented certain policies. 256 00:29:10,150 --> 00:29:20,620 But considering the debts which Lebanon has currently incurred, which is ninety five billion, it is a fairly insignificant amount of money. 257 00:29:20,620 --> 00:29:25,360 And Hezbollah has said that if IMF terms were acceptable, it would cause a revolution. 258 00:29:25,360 --> 00:29:28,070 But considering what's happening in the country today, 259 00:29:28,070 --> 00:29:35,420 a revolution revolution seems already to be going on as people in the streets constantly like society, has imploded on itself. 260 00:29:35,420 --> 00:29:37,600 Not all countries are in deep trouble, 261 00:29:37,600 --> 00:29:45,700 but none of the IMF reforms are not going to be implemented because of the amount of political resistance to it. 262 00:29:45,700 --> 00:29:51,730 It's unlikely that there's some rest is going to stop in the short run because the most important things in Lebanon's economy, 263 00:29:51,730 --> 00:29:57,400 you know, services and tourism will not recover for the foreseeable future. 264 00:29:57,400 --> 00:30:03,660 Because of coalbed and B, because of the very unstable nature of the country, is not appealing for tourists or investors. 265 00:30:03,660 --> 00:30:14,830 And that might cause the instability to accelerate because the head of the University of Beirut said that he considers what the country is facing, 266 00:30:14,830 --> 00:30:20,530 the biggest crisis since 1866 when the University of Beirut was founded. 267 00:30:20,530 --> 00:30:28,530 The fact that people consider this a bigger problem than a civil war probably says enough about how truly catastrophic the situation has become. 268 00:30:28,530 --> 00:30:36,340 And yeah, exactly. The situation won't be getting better. To add to that, you know that the protests in 2019 basically started because the government, 269 00:30:36,340 --> 00:30:40,570 desperate for money, tried to tax frequenting services like WhatsApp. 270 00:30:40,570 --> 00:30:48,410 And the only reason the protests really died down was, I mean, to be honest, because I've covered the process that we see today should be seen, 271 00:30:48,410 --> 00:30:51,430 at least in my opinion, as a continuation of these protests, 272 00:30:51,430 --> 00:31:00,220 as with the worsening of the situation due to combat and due to the fourth of August port explosion. 273 00:31:00,220 --> 00:31:05,230 These protests, you know, I've just further been fewer than given more reason and more legitimacy. 274 00:31:05,230 --> 00:31:11,560 And the fact that with the port explosion to happen, no officials had to take have taken any responsibility. 275 00:31:11,560 --> 00:31:18,190 Even the efforts of the judge tasked with determining the cause of the poor black led to the indictment of four politicians. 276 00:31:18,190 --> 00:31:22,660 But the judge was then swiftly discredited and accused of targeting officials. 277 00:31:22,660 --> 00:31:29,500 It seems like the political system in Lebanon is managing some way to give no concessions to the population, 278 00:31:29,500 --> 00:31:34,480 which is just going to keep on fuelling these protests. And I don't know where this is going to go. 279 00:31:34,480 --> 00:31:40,710 I think it's going to be interesting to see. What gives way? 280 00:31:40,710 --> 00:31:45,810 First, the social pressure on the political system. 281 00:31:45,810 --> 00:31:53,670 So we're seeing protests against the mandated lockdown for Kofod, 282 00:31:53,670 --> 00:32:05,730 but we also have this intransigence by the political elite and actors to make necessary reforms in terms of good governance, 283 00:32:05,730 --> 00:32:10,350 accountability, transparency, no more corruption. 284 00:32:10,350 --> 00:32:14,700 And we also have calls from international donors. 285 00:32:14,700 --> 00:32:26,310 And this is very much supported both by McCrone as well as by the U.S. and the IMF, that any international help. 286 00:32:26,310 --> 00:32:34,080 Financial help has these red lines, these requirements of instituting political reforms. 287 00:32:34,080 --> 00:32:38,870 So. It really is just a matter of time. 288 00:32:38,870 --> 00:32:46,310 Which of these forces either boils over and goes out of control or just gives way, 289 00:32:46,310 --> 00:32:55,940 becomes more complacent and whether things will remain more of the status quo or if there's going to be substantive change, 290 00:32:55,940 --> 00:33:04,250 whether on the social sides in terms of a social uprising in some sort or political reform that is good, 291 00:33:04,250 --> 00:33:09,770 that is beneficial for the country and can take steps forward. 292 00:33:09,770 --> 00:33:12,410 And I mean, it's hard, at least on the social side, 293 00:33:12,410 --> 00:33:21,240 because you do have political actors such as Hezbollah that have implemented intimidation tactics and they've always had. 294 00:33:21,240 --> 00:33:23,330 I do think you say something interesting. 295 00:33:23,330 --> 00:33:31,940 It's interesting because I believe that the ongoing crisis is probably going to be the deciding one if this doesn't break of the political system. 296 00:33:31,940 --> 00:33:38,270 I can imagine something like the political system survived the civil war when at some point something does does have to break. 297 00:33:38,270 --> 00:33:46,660 And I do hope it's a political system because. You know, you can't you can't have an unemployment rate at 30 or 35 percent, 298 00:33:46,660 --> 00:33:53,740 have one in five people in the country, be Syrian refugee and expect stability. 299 00:33:53,740 --> 00:34:00,070 And however much the political elites in the country benefits from the status quo, 300 00:34:00,070 --> 00:34:04,540 I do think that they also understand that if the country is completely at war, 301 00:34:04,540 --> 00:34:10,450 completely collapses, there is no economic system for them to leech onto and drain money out of. 302 00:34:10,450 --> 00:34:15,580 So I do wonder at some point, will there come a point where they think, OK, it has gotten bad enough, 303 00:34:15,580 --> 00:34:22,440 now we have to institute some degree of reform because the protests have been going on now for I think it's 14 months. 304 00:34:22,440 --> 00:34:26,020 You know, there's not going to stop. I believe they give they've gone on for that long. 305 00:34:26,020 --> 00:34:35,320 They're not going to just go away. One development to look out for is, I think what happens with. 306 00:34:35,320 --> 00:34:47,260 The Iran nuclear negotiations, because Hezbollah has certainly not hidden its delight that Biden is replacing Trump and 307 00:34:47,260 --> 00:34:53,350 therefore the maximum pressure campaign on Iran and therefore Iran's proxies such as Hezbollah, 308 00:34:53,350 --> 00:35:06,730 will be lifted. Interestingly enough, when French President Macron called for major reforms to Lebanon, he was met with criticism in Iran. 309 00:35:06,730 --> 00:35:12,760 Iran's ultra conservative newspaper, Kayhan, accused him of trying to, quote, 310 00:35:12,760 --> 00:35:21,070 weaken the Lebanese resistance when talking about the French hosting conference 311 00:35:21,070 --> 00:35:28,210 at which international donors pledged over 250 million euros to help Lebanon. 312 00:35:28,210 --> 00:35:37,090 They called it merely a bluff and said that if they really wanted to help Lebanon, 313 00:35:37,090 --> 00:35:44,260 international actors should lift sanctions against the Lebanese government and its people. 314 00:35:44,260 --> 00:35:59,170 And so you see, Iran and Hezbollah are extremely reticent to enacting any types of political reforms that international donors are asking for. 315 00:35:59,170 --> 00:36:08,860 Of course, we should not overstate the influence of the nuclear deal on Lebanese politics, 316 00:36:08,860 --> 00:36:16,570 even if a nuclear deal is reached with Iran, which offers financial relief to Iran, and therefore, 317 00:36:16,570 --> 00:36:29,680 Iran is able to provide Hezbollah with the hundreds of millions of dollars in funds that it has long given that it's not going to solve Lebanon's 318 00:36:29,680 --> 00:36:46,900 problems and that but it will certainly advantage Hezbollah vs of the other political actors and perhaps enough to keep Hezbollah afloat and in turn, 319 00:36:46,900 --> 00:36:52,570 keep the current political arrangement afloat. I totally agree with Michael. 320 00:36:52,570 --> 00:36:59,140 The chances of perhaps a new Iran nuclear deal mean that the system would survive longer. 321 00:36:59,140 --> 00:37:06,700 But it seems at least to be pretty clear, since 2000, the 2015 demonstrations in Beirut were over. 322 00:37:06,700 --> 00:37:14,320 A hundred thousand people asked for change due to the fact that those huge mounds of uncollected garbage in the streets, 323 00:37:14,320 --> 00:37:17,620 I mean that in that situation, the government quashed the protest. 324 00:37:17,620 --> 00:37:26,170 But it's generally considered to be basically the birth of the civil movement that later, which has now sought to challenge the political system. 325 00:37:26,170 --> 00:37:31,630 The government had their chance after these demonstrations to prove that they were going to change. 326 00:37:31,630 --> 00:37:39,430 And 2018, they had parliamentary elections. By that point, it was it was already too late because the voter turnout was under 50 percent. 327 00:37:39,430 --> 00:37:48,880 So the people really seemed to have no trust and no faith in the system, even though perhaps it's going to it will try to show that it's changing. 328 00:37:48,880 --> 00:37:53,360 I mean. After that, you have the 2019 nationwide protest. 329 00:37:53,360 --> 00:37:57,740 The establishment proposed as Prime Minister Hassan Dhiab, 330 00:37:57,740 --> 00:38:02,030 who was a computer engineering professor and who basically was going to form a new 331 00:38:02,030 --> 00:38:06,550 government that they claim was composed of technocrats with no political loyalties. 332 00:38:06,550 --> 00:38:09,740 But like we saw, that didn't bring any change. 333 00:38:09,740 --> 00:38:19,760 One would have thought that with the port explosion, which, to be honest, is the worst thing that could happen to the capital city of a country. 334 00:38:19,760 --> 00:38:26,990 A lot of people thought finally, you know, the system is going to have to change after such a devastating event. 335 00:38:26,990 --> 00:38:35,570 But even then, like I said earlier, they made sure that the judges were unable to do their job and to indict anybody and 336 00:38:35,570 --> 00:38:41,300 actually have been paid for the negligence that they basically showed during that situation. 337 00:38:41,300 --> 00:38:45,860 To be honest, in my opinion, as it's clear that the people who don't believe in the system anymore. 338 00:38:45,860 --> 00:38:52,370 But at this point, they don't even have any other option than not to protest because they've been pushed to such a brink. 339 00:38:52,370 --> 00:38:58,610 It's very possible that the only way for you is for there to be a renewal of the system is to 340 00:38:58,610 --> 00:39:05,930 perhaps go down into either some sort of civil war which would lead to Lebanese self-destruction. 341 00:39:05,930 --> 00:39:08,420 And perhaps out of that, 342 00:39:08,420 --> 00:39:15,440 could a new system be born or you would have perhaps a situation where there would be a form of cantonization where you would basically have 343 00:39:15,440 --> 00:39:24,430 a territorial partition of Lebanon like they used to be there in the civil war where the Sunnis would hold Tripoli and parts of Beirut. 344 00:39:24,430 --> 00:39:31,460 The she's would hold the western part of Beirut and the Bekaa Valley and the south of the country. 345 00:39:31,460 --> 00:39:35,420 The Druze would hold south and mount Lebanon and the Christians in the north of Mount Lebanon. 346 00:39:35,420 --> 00:39:45,030 But it really seems like the government is not actually serious about its efforts because it's continuously trying to block any. 347 00:39:45,030 --> 00:39:53,040 Possibility or opportunity for change? And the people have reached the point at which they cannot possibly live anymore. 348 00:39:53,040 --> 00:40:00,120 Like you said. And so a big problem with that was the Lebanese political system faces as though, you know, it's a system based on Band-Aid fixes, 349 00:40:00,120 --> 00:40:10,950 the sensors in the 1930s, a Band-Aid fix to avoid the sectarian tensions which had taken place in an. 350 00:40:10,950 --> 00:40:20,820 Syria in the 1920s, then, for example, the idea of fuel subsidies, I meant so much based on 1994 process and haven't changed. 351 00:40:20,820 --> 00:40:26,320 And then the new changes to the to the parliament from 1989. 352 00:40:26,320 --> 00:40:30,680 I know that there's never been a desire for truly systemic change. 353 00:40:30,680 --> 00:40:33,910 You know, I wonder, as you said, you know, what's going to cause it. 354 00:40:33,910 --> 00:40:41,320 And I don't know if even a civil war would change unless the country, as you say, like sort of devolves into into cantons. 355 00:40:41,320 --> 00:40:44,890 On the other hand, you have the Magnitsky Act, 356 00:40:44,890 --> 00:40:51,990 which the U.S. uses to target human rights offenders and claim based on something which happened in Russia. 357 00:40:51,990 --> 00:41:00,340 It's how they sanction certain people in Putin's regime. A similar approach would be one of the few things which would work for Lebanon as well, 358 00:41:00,340 --> 00:41:03,340 because they would punish the people who benefit from the system economically. 359 00:41:03,340 --> 00:41:06,590 And that's the only way to punish them, because politically, they you know, 360 00:41:06,590 --> 00:41:11,500 I think we've proven in this episode there is nothing to worry about for them. Know the political system will remain. 361 00:41:11,500 --> 00:41:16,930 And if unless you take away the enticements for them to maintain our political system, 362 00:41:16,930 --> 00:41:22,920 which is financial wealth and power for primarily financial wealth, you know, it's not going to change. 363 00:41:22,920 --> 00:41:26,440 I do think that if countries would be serious about it, I think, you know, 364 00:41:26,440 --> 00:41:33,580 targeted sanctions against a Lebanese political elite might be a solution, but that's questionable. 365 00:41:33,580 --> 00:41:39,460 Do you think the American government would apply the sanctions equally amongst the different NOCs? 366 00:41:39,460 --> 00:41:41,790 No, there wouldn't. And there's a problem, right? 367 00:41:41,790 --> 00:41:48,010 You know, as as Michael has made very clear, that target Hezbollah way more than it would target the Maronites. 368 00:41:48,010 --> 00:41:53,620 I think France would have serious reservations about sanctions against the marinates. 369 00:41:53,620 --> 00:41:59,410 Other countries are so closely intertwined in Lebanese politics that there would be a lot of pushback against 370 00:41:59,410 --> 00:42:07,780 any sanctions against them and even actors within the political system that do want change like hasn't. 371 00:42:07,780 --> 00:42:13,450 When he tried to drop the prices of cement from one hundred dollars to thirty dollars per time, 372 00:42:13,450 --> 00:42:19,360 which basically had been produced previously controlled by a cartel of three companies, 373 00:42:19,360 --> 00:42:25,450 that basically pegged the price extremely high and didn't allow any international competition, 374 00:42:25,450 --> 00:42:32,800 even when politicians are trying to bring the prices down and to fight these cartels, which are so closely tied to the political system. 375 00:42:32,800 --> 00:42:37,150 This planet is basically only had success for a temporary amount of time. 376 00:42:37,150 --> 00:42:40,360 It seems practically impossible for change to happen from within. 377 00:42:40,360 --> 00:42:48,210 And like you said, any pressure from the outside doesn't seem to have any any effect on on on the political system in Lebanon. 378 00:42:48,210 --> 00:42:52,770 Look, if something were to happen to Lebanon, a conflict, a civil war, 379 00:42:52,770 --> 00:42:57,930 this would only exacerbate the whole situation with Syrian refugees in the country 380 00:42:57,930 --> 00:43:02,130 and create probably a new wave of refugees trying to come towards Europe, 381 00:43:02,130 --> 00:43:06,120 which would then create more tensions between Turkey and Europe. 382 00:43:06,120 --> 00:43:13,690 There's definitely an interest for the international community to solve this issue because they will have international repercussions. 383 00:43:13,690 --> 00:43:19,300 You know, Lebanon is on its eastern border, Syria, where there's a war. 384 00:43:19,300 --> 00:43:27,610 On its southern border, Israel, with which Lebanon is at war and to its north is Turkiewicz, which it has a complicated set of relations, 385 00:43:27,610 --> 00:43:32,710 and to its west is the Mediterranean, which has become its own political minefield recently. 386 00:43:32,710 --> 00:43:39,620 But I do agree absolutely that, you know, it's in everybody's best interest to ensure that Lebanon situation improves, because if it doesn't, 387 00:43:39,620 --> 00:43:52,220 it is not going to let the troubles or the problems aren't going to be consigned to the Middle East will percolate into Europe just like Syria did. 388 00:43:52,220 --> 00:43:56,300 Thank you for listening to this episode of Almanack, the Oxford Middle East podcast. 389 00:43:56,300 --> 00:44:04,330 Join us next time when I sit down with the historian Eugene Rogan to discuss his perspectives on studying history and the importance of it. 390 00:44:04,330 --> 00:44:08,610 Element like it's a student run initiative at the Middle East Centre and University. 391 00:44:08,610 --> 00:44:15,390 The opinions expressed in the podcast are not in any way represent official opinions of the University of the Middle East. 392 00:44:15,390 --> 00:44:20,030 It is editors and hosted by myself. Gilder's focus with the available Vedo Lily. 393 00:44:20,030 --> 00:44:32,346 So Felix Walker, Michael Memory and Max Randall.