Are the Saudis set to turn up the heat on Lebanon? | Saudi Arabia

Are the Saudis set to turn up the heat on Lebanon? | Saudi Arabia

It was nearly a year ago that an extraordinary story involving Saad Hariri, the Lebanese prime minister, unfolded in the Saudi capital Riyadh. Hariri announced in a live TV address that he was resigning as prime minister, citing threats to his life from Iran

Reading in a stilted manner from a written script, he said that Iran was responsible for “devastation, desolation and chaos wherever it goes” adding “I want to tell Iran and its followers that it will lose in its interventions in the internal affairs of Arab countries.” It was a highly ironic thing to say, given the circumstance, but Hariri, if he was aware of the irony, was careful to mask it. With good reason.

The date of the broadcast, November 4, 2017, is significant. It was the same day that the Saudi Crown Prince Mohammed bin Salman, MBS as he is known, oversaw the arrest of nearly 200 senior businessmen and members of the ruling family and incarcerated them in Riyadh’s five-star Ritz-Carlton Hotel in what was billed as an anti-corruption drive. Over the next two months, most were released but only after agreeing to hand over the bulk of their assets to the government. 

For Hariri, whose family had extensive and troubled business holdings in the kingdom, the so-called “anti-corruption” drive had ominous implications. His own family was spared arrest but the message was unmistakable. He had no choice but to accept a Saudi engineered coup d’etat.

Hariri then spent nearly two weeks under effective house arrest before being allowed to leave Riyadh for Paris after French President Emmanuel Macron intervened. On returning to Beirut in early December, he rescinded his resignation and matters returned to what constitutes normal in the fractured political landscape of Lebanon

The entire Hariri affair, designed as a putsch by MBS to underscore Saudi Arabia’s ability to curtail the meddling of Iran turned into a spectacular own goal. His growing reputation as a leader who acted fast without understanding the consequences, already much on display with the war in Yemen and the dispute with Qatar, was further reinforced.

The Lebanese, angered by Saudi high-handedness, rallied around Hariri. Hezbollah, the Iranian backed force that is a key power broker in Lebanon, emerged if anything in a more powerful position than before.

However, by the time the country went to the polls in May of this year much of the sympathy for Hariri had evaporated in a bitter climate of economic stagnation and, in the capital Beirut, the stench of an unresolved and long-running dispute over rubbish disposal. Hariri’s Future Movement party lost a third of its seats, winding up with just 20 in the 128-seat parliament. Hezbollah and an allied party, Amal, won 28 seats. Since then efforts to form a government with Hariri as prime minister have gone nowhere.

It is a situation that the speaker of the parliament Nabih Berri is reported to have described as “very dangerous”. He added “Lebanon is in intensive care … The economic situation is very serious.” 

The speaker was not exaggerating. Lebanon now has one of the largest debt burdens in the world, with government debt standing at more than 150 percent of GDP. In a recent analysis, the influential economic consultancy firm Capital Economics notes: “The current account deficit stands at 25 percent of GDP. The deficit is funded largely through … portfolio inflows and deposits into local banks from non-residents – mainly from the Lebanese diaspora.” 

Saudi Arabia has approximately 200,000 Lebanese expats and as the country ratchets up their Saudisation drive – replacing migrant workers with Saudi citizens – their jobs and the remittances they send back to Lebanon are increasingly at risk. 

Though Mohammed Bin Salman stumbled badly in the Hariri affair, his simmering anger towards Iran continues unabated. He could go for less dramatic measures than seizing the prime minister and ordering his resignation, such as the expulsion of Lebanese workers and an embargo on Lebanese goods, mainly foodstuffs, shipped to Saudi Arabia and other Gulf countries. 

An even more powerful measure would be to impose restrictions preventing any dealings with Lebanese banks, be they deposits via remittances or business transactions. Such a move would encourage the outflow of capital from the banks and force the central bank into devaluing the Lebanese pound, making it even more challenging to service a mountain of borrowing in a country where half of all government revenue goes towards paying down the debt. 

That is exactly what happened in November when Hariri was coerced into resigning. As the Capital Economics report notes: “the eruption of tensions late last year provided a glimpse of how vulnerable the Lebanese banking sector is to an escalation of tensions. During that period non-resident deposits dropped by three percent in a single month.” 

Were MBS to use such means to ratchet up the pressure in order to gain further concessions and force Lebanon to rein in the power of Hezbollah, the implications for the already fragile Lebanese banking sector, and with it the economy, are potentially catastrophic. 

The question that remains is how far is Mohammed Bin Salman prepared to go to carry the fight to Iran via a proxy economic and political war in Lebanon? He may even be thinking that the Israelis, always uneasy about Hezbollah, will support some form of military action.

With US sanctions looming on Iran and with the unconditional and unquestioning backing of the Trump White House, MBS may believe now is as good a time as any to escalate his proxy war. It would be a reckless choice, one that would do incalculable harm to the people of Lebanon but then this is a leader who has shown himself time and again ready to leap first and think later, consequences be damned.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance. 

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