ASSESSMENTS

Lebanon's Profligate Factions Gamble on a Foreign Rescue

Jun 5, 2019 | 10:00 GMT

A protester passes a burning tire during a demonstration over feared pension cuts May 20, 2019, near the government's headquarters in Beirut.

(MARWAN TAHTAH/AFP/Getty Images)

Highlights

As a result of unsustainable subsidies, youth unemployment, a refugee influx, the economic effects of the Syrian civil war and the strings attached to foreign aid, Lebanon could face an economic crisis if it does not pursue austerity measures.
But because there is no leader strong enough to impose austerity, Lebanon's factions are more likely to risk an economic crisis than a political one, meaning they will wait for critical foreign aid from powers who wish to prevent another civil war.
Such a calculation, however, depends on continued regional stability, meaning that a deeper conflict between the United States and Iran could have profound knock-on effects on the Lebanese economy.

Since Lebanon's elections in May 2018, the country's big political factions -- the largely Sunni Future Movement of Prime Minister Saad al-Hariri, the Free Patriotic Movement of Foreign Minister Gebran Bassil, the generally Christian Lebanese Forces of President Michel Aoun, and the Shiite bloc of Amal and Hezbollah -- have agreed on one thing: the country's finances are unsustainable. With a debt-to-GDP ratio of 152 percent and a banking sector filled with depositors who readily withdraw their cash come any crisis, Beirut's politicians know that reform and austerity are a must if Lebanon is to maintain its budget and wider economy. Since Lebanon's elections in May 2018, the country's big political factions -- the largely Sunni Future Movement of Prime Minister Saad al-Hariri, the Free Patriotic Movement of Foreign Minister Gebran Bassil, of which President Michel Aoun is part, the generally Christian-dominated Lebanese Forces, and the Shiite bloc of Amal...

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