Lebanon: “We’re all going to hell”

Yves here. David, a member of our Brexit brain trust who also regularly opines on non-US politics and bureaucratic disfunction, has been raising concerns about what is happening in Lebanon and that they have far greater geopolitical ramifications than most realize. The fact that a shipment of fertilizer that had been idling in the Beriut port for IIRC 18 months and exploded with nuclear-bomb-level force was well covered in the international press. But after a couple of weeks of disaster porn, media attention moved on.

When I was in NYC to see my surgeon about my hip non-progress in mid October, I also saw my hair guy. He comes from a very wealthy Lebanese family, his father received custom-made watches (Patek Phillipe or equivalent), usually with lots of diamonds, from people like Assad (father owned the biggest oil refinery and related gas stations, also did a lot of construction and retained most of the properties he built).

My Lebanese friend gave me an earful on current conditions. One of his brothers is visiting. Currency 1/10th of what it was a year ago. Food shortages made worse by power shortages resulting in a lack of refrigeration. Medicines, even Tylenol, not available. Kids dying.

Lebanon has gone from 20% poor to 80% poor. The rich were largely able to get their funds out before the worst of the collapse. David’s reaction to that report:

This does need to be watched because it’s the last relatively stable country in the region. You’ll find the Lebanese are the greatest conspiracy theorists in the Middle East (and that’s saying something). Everybody has their own conspiracies about foreigners, which serve to a large extent to excuse themselves. Outside powers (at the moment Iran and Saudi Arabia, historically Syria) have always tried to manipulate the country, but the fact is that the hopeless political system (18 ethnic groups dividing the spoils between them) the corruption and general uselessness of the political class and the incapacity of the state have brought them to this.

The state has never been able to guarantee power supplies (even hotels and government buildings have their own emergency generators) or even collect the rubbish competently. The economy has been in free fall since the crisis of 2019 and the total lack of any coherent government response to the August 2020 disaster is in many ways the last straw. But the usual politicians are still playing the usual political games, and now Hezbollah, which did have a cleaner reputation, is making trouble as well over the enquiry into the explosion. Lebanon is a country with effectively zero capacity for coherent reform. When the lid comes off it’s going to be very nasty. I hope we can avoid that, but I’m reading the Francophone Lebanese press every day with increasing concern. To be continued I fear…

And now we have his latest sightings, hoisted from recent e-mails.

By David, who was born in England but hasn’t lived there for a while

Just to cheer you up on a Sunday, here’s a story about Lebanon which has been pretty much ignored by the western media, but which conforms to the rule that every time you think the eternal Lebanese politico-economic crisis can’t get worse or more complicated, it gets worse and more complicated.

This decent and relatively balanced account from Al Jazeera explains the basics: the Saudis have recalled their ambassador in Beirut and expelled his Lebanese counterpart, and a number of other Gulf states have followed suit. Exports are also being cut off. The pretext is remarks about Yemen made on TV some time ago by a politician who has recently become a Minister in the new and extremely fragile government, that itself hasn’t met for two weeks.

And here’s a local account from L’Orient-Le Jour, the main French language paper in Lebanon, which gives a lot more detail. For obvious reasons, LOLJ is following every twist and turn of the messy saga.

What this is all about, of course, is the struggle between Iran and Saudi Arabia for political influence in the country. Saudi Arabia, which has been the dominant foreign power since the withdrawal of the Syrians in 2005, and especially since the beginning of the war in Syria, has become increasingly alarmed at the growing Iranian influence, and the growing strength of Hezbollah, both politically and militarily. Much of the rebuilding of Beirut after the civil war was funded with Saudi money, and the Saudis are going to be fundamental to any reconstruction package now. At one point, Lebanon’s tourist industry was largely from the Gulf, and many Saudis and others bought property there.

But over the last decade, Gulf governments have put increasing pressure on their people not to go to Lebanon, thus exacerbating the country’s economic problems. The Saudis seem to be trying to use economic pressure to counter Iran’s military influence, but they risk actually blowing the government up and tearing the country apart.

Sunni politicians, always sensitive to Riyadh, are calling for the Minister to  be sacked, which would give the Saudis an effective veto over any future Lebanese government. It has to be said that Hezbollah hasn’t helped either, with its demands for the judge in charge of the August 2020 Port explosion enquiry to be sacked (they forced the first one out), although he hasn’t indicted anyone from Hezbollah or Amal, the other main Shia political party.

The fact that all the major political parties have refused to cooperate with the inquiry suggests that not only do some of their members in each case have political responsibility(eg not acting on warnings) but that people lower down in the patronage system (again appointed on ethnic and clan grounds) may actually have been deficient in doing their jobs.

I suspect that a bigger worry for the clan leaders is that any investigation will, at last, take the lid off some of the things that “everyone knows” in theory, but whose details have never been revealed. This, I think is why the political class is hanging together for fear of being hanged separately, since they all have a lot to hide, and at many different levels. Depending on your definition of “crime” and “guilt” and “responsibility” pretty much the whole of the Labanese political class, and many of the people they have given jobs to, shoukd be in the dock.

A bunch of kids having a match-throwing competition in a firework factory.


There are a couple of other elements which come out of these articles (and others, the situation is changing all the time).

The most important, perhaps is that in this Iranian-Saudi spat, neither side is showing very much subtlety, and indeed neither seems to have much idea of how to wield soft power. This is not surprising perhaps in a region where force is the preferred mechanism for settling problems.

Remember that in 2017, Saad Hariri, then Prime Minister, was summoned to Riyadh and forced to read a statement on Saudi TV resigning his position. He retracted his resignation when he returned to Lebanon, but that gives you an indication of what the Saudis think subtlety is. The Saudis are obsessed with Hezbollah, and that party, in turn, has not always behaved very sensibly either.

However, there are some mildly encouraging signs. The Minister concerned, Georges Corhadi, is a Maronite Christian, which in a way is fortunate since the quarrel is not an internal Sunni-Shia one. On the whole, the Lebanese system is backing the Mikati government and Corhadi, as is the Arab League, and major western powers. Without overtly taking sides, they are all, in coded terms, trying to encourage the Saudis to calm down. The US have apparently been to see the Saudis and tried to get them to back off, but to no effect.

But there is also scope for escalation: hundreds of thousands of Lebanese work in the Gulf, often in highly-paid jobs such as banking. There are rumours that they might be expelled, which would mean a major source of foreign earnings drying up .

And finally, this all takes place at a time of unprecedented disgust with the Lebanese political class, which makes the Romanovs of 1917 seem models of creative compromise by comparison. Because the country is an imperfect democracy, its politics entirely structured by ethnic and clan affiliation and foreign influence, there is no “régime” that could be “changed.” Everybody agrees that the current ethnic spoils system and the current corrupt elite has to go, but everybody keeps voting along ethnic lines and for the same corrupt elite. It’s hard to see a way out.

Of course, that’s the very simplified version.

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  1. LyonNightroad

    If they ran on a system of informal credit this would be a non-issue. But then how would the parasites do the… umm… needful.

    1. Yves Smith Post author

      Are you trolling? This comment makes no sense. Predatory bankers are not in the top five and probably not in the top 10 of Lebanon’s problem.

      Lebanon is a small open economy, not even remotely an autarky, in the middle of an off and on hot war zone. Aside from its pre-existing problems, it had a huge amount of productive capacity destroyed in the port blast.

      Tell me how your informal credit solves the lack of electricity or the difficulties in importing food independent of severely limited refrigeration, for starters.

      1. LyonNightroad

        Ah, Sorry! I just read the history of debt and I was opining on how this type of systemic risk couldn’t really build up on informal credit in the first place. It is so absurdly tangential that you should just delete it

        1. Yves Smith Post author

          That’s fair but we get very few comments on the wrong post.

          And if this was meant on the cashless society post, this is snark, not serious. You can’t run anything bigger than a two horse town on “informal credit”. As David Graeber described long form in his classic, Debt: The First 5000 years, debt was formal even in the thousands BC, see his discussion of tally sticks. Even Ur in 1700ish BC had all of the major elements of modern finance, such as loan sales, venture capital, derivatives, syndications.

          There’s a more thoughtful and useful way to say we need to get banks under control. And it’s too easy to forget that banks were pretty pedestrian and banking was no higher paid than average jobs in the US prior to 1980, thanks to….gah….regulation!

          1. skippy

            Where is the fun in that for a sociopath that used to skin cats as a kid for being odd or some birth group dynamic …

      2. skippy

        The comment lacks any validity because it fails in the time and space of geopolitical forces flowing around and through it over decades and myopically focuses on retail banks without any distinction to the shadow sector, nor the ideology that such thinkers enabled and now utilize to drive their agenda even more extreme in the face of its dysfunctional results …

        Lmmao crypto … meta wealth in the meta verse and your don’t even have to be there or awake and make money …

  2. flora

    Thanks for this report. I wonder, speculating freely, if the US leaving both Afgh and Iraq, Iran’s neighbors to the east and west, has created a regional power vaccuum playing out in Lebanon.

  3. PlutoniumKun

    Its all very sad. At various times of its history – certainly up to the 1970’s, Lebanon was a very prosporous country. And beautiful too – potentially beautiful beaches (mostly destroyed), with ski resorts in the mountains above Beirut and some surprisingly good vineyards. It could have been what Dubai is now (except with some sort of democracy and openness), but for all sorts of reasons they blew it. I think one element that has contributed to the problems in the Lebanon is that so many Lebanese families have family and business interests all over the world (one Lebanese friend of mine grew up in Nigeria), so, as a famous Lebanese would put it, don’t have enough skin in the game to go the extra mile to make peace. But of course plenty of outsiders have done their best.

    One element that I think has made things worse more recently is the civil war in Syria. On my one and only visit to Lebanon, 20 years ago, the Syrians were widely disliked by the Lebanese, but nearly everyone seemed to reluctantly agree that they were effective at keeping peace and stability.

    But the lack of any real civil society was all too obvious to see. One thing that stuck in my mind was that when one day I cycled up a mountain road in the Bekaa valley I came across an attractiv, newly built small resort hotel and restaurant. What struck me coming up was that the road had also been recently built and paved with (unusually for Lebanon), a reasonably good footpath. Presumably, the owner had either paid for the road, or, more likely, had used connections to get it all upgraded. But close to the hotel, there was a line of cyprus trees for several hundred metres leading to the hotel. It looked very attractive. The problem is, that the trees had been planted in crudely cut holes in the new footpath, making it utterly useless. Presumably, the owner wanted his tree lined access, and nobody was willing to stop him hacking away at the public footpath to do so. To me, this said everything needed about how the Lebanon was run.

    1. petal

      My father went there when he was in the Army(US), and when I was a kid during the 80s he would always tell me how beautiful Beirut used to be. It was definitely one of, if not the top, place he had visited. He never raved about anywhere else he had visited or was stationed, just Beirut. He would tell me about it whenever we’d see reports on the nightly news about the civil war. The video footage they’d show was of a city destroyed, and as a kid it was hard for me to imagine what it could have been like when he was there.

      David, thank you so much for the report.

      1. John

        I had several friends who lived in Beirut in the 1970s and taught at the American School or American University. They would wax poetic about the city, the beaches, the corniche. One woman of my acquaintance was there in the early phase of the civil war and endured the shelling across the green line. I sat and listened to her talk for hours about her experience. I suppose today we would call what she suffered PTSD. With these second hand memories of a city and country I longed to see, I have watched from afar as it has come apart. The present political dispensation is hopeless, but neither can it be replaced without putting the country and its people through the wringer.

  4. Any Cause Will Do

    Appointing inexperienced and incompetent clan members has a certain ring of familiarity to it.

  5. Petter

    My youngest daughter has a friend who works for an international agency in Beirut. the last time she talked to her was about a month ago. She told my daughter that she doesn’t bank in Beirut because there is a huge disparity between the official rate and the black market rate. She loads up on dollars when out of the country and then exchanges the dollars for Lebanese pounds in stores, fifty to a hundred dollars at a time. The official bank rate is (was) around 1530 to the dollar. The black market rate is ten, eleven times the official rate. The rate varies so she never exchanges more than fifty to a hundred dollars at time. I asked my daughter about the black market and she told me that her friend told her the stores are the black market.
    As for electricity (and the last time my daughter talked to her was before the latest electricity crisis), her building got electrify thought the black market and it was stable as in it had electricity 24/7.
    Oh one other thing, regarding electricity. Her friend told her that you had to be really careful about eating out at restaurants because there was a lot of food poisoning due to power outages knocking out restaurant freezers and refrigerators.

  6. Gerrard White

    @Yves Smith

    Bingo – Just change the name of the country

    “And finally, this all takes place at a time of unprecedented disgust with the Lebanese political class, which makes the Romanovs of 1917 seem models of creative compromise by comparison. Because the country is an imperfect democracy, its politics entirely structured by ethnic and clan affiliation and foreign influence, there is no “régime” that could be “changed.” Everybody agrees that the current ethnic spoils system and the current corrupt elite has to go, but everybody keeps voting along ethnic lines and for the same corrupt elite. It’s hard to see a way out.”

  7. Gordon

    The book I’m currently reading – Daron Acemoglu & James A. Robinson’s ‘The Narrow Corridor: How Nations Struggle for Liberty’ – has a section on Lebanon which illuminates the issue.

    Their basic thesis is that a successful nation must have a powerful state apparatus capable of doing things (see today’s NC article ‘Why the US Supply Chain Crisis is Intractable and Will get Worse’ for a worked example of why this is so necessary) but that state must also be constrained to act in the public interest by pressure exerted on it by civil society.

    So, successful nations exist when state and civil society effectively complement and control each other with neither getting the upper hand. This is the ‘narrow corridor’ of the title, but I prefer to imagine it as a narrow mountain ridge for veering off the narrow path to either side leads to a perilous fall.

    On the one hand, if the state escapes control by civil society (or was never under it in the first place), then the result is exploitative government. On the other hand, if civil society has reason to fear the development of state power it may act to prevent its emergence.

    Acemoglu & Robinson use the Lebanon as an example of the latter case, arguing that its various communities fear that, were a powerful national government to develop, it might fall under the control of rival groups and move against them. So, private armies, power supplies and the rest persist alongside a central government that is little more than a figurehead, incapable of addressing let alone solving the country’s many pressing problems.

    1. Susan the other

      I remember the same news about the possibility of an Israeli missile. It makes sense. Usually when there is a concerted coverup no news touches the subject for a year or so and then the disinformation comes out as “analysis”. After an explosion like that one there probably would not be any evidence left on the ground. I think I remember at the time some info not so much about Hizbollah but more about Israel contesting Lebanese international waters over a natural gas field.

    2. drumlin woodchuckles

      Then again, whatever Lebanese let that ammonium nitrate just sit there in the heat to cook off and blow might want to say ” Israel diddit ” in order to divert attention away from themselves. The fact that Hizballah wants to delete a judge in the case indicates that Hizballah fears the revelation of a non-Israeli-related cause.

      And all the others would go along with Hizballah because no part of the elite wants to be fingered. Hizballah might well be the “designated villain” this time in the long running game of musical fact-finding prevention.

      It reads to me as if Lebanon has a “Petionville” class the same as Haiti does, and Lebanon’s “Petionville” will make Lebanon as poor as Haiti, and then as poor as South Sudan.

  8. Stanley Dundee

    Thanks, David and Yves, for this valuable perspective on Lebanon, which seems to be largely neglected in our legacy media.

    Good coverage on Lebanon from a Zone B perspective may be found at The Cradle. E.g. here’s a relatively deep dive into the issues around the judge leading the investigation of the giant explosion in Beirut. TLDR: the responsibility for the neglect of the stored nitrate seems to lie with the judiciary and the military, neither of which has been questioned in the current investigation.

    IMHO, the struggle in Lebanon is, for now, the hottest flash point in the global tussle around the failing US empire. Lebanon moving into Zone B would be a significant blow to US hegemony (Zone A). The complexity of the situation there does not lend itself to easy generalities, however.

  9. David in Santa Cruz

    Any discussion of Lebanon without including the geopolitics of having a contiguous border with the 51st U.S. state seems unserious to me. Lots of places are run by corrupt political clans, but most of them seem to be able to keep the meat chilled until the chef cooks it.

    This is not to say that I lack empathy for the Lebanese. Like Mexicans, Pakistanis, South Africans, Filipinos, and other victims of colonialism and the subsequent American imperium, they deserve better.

    1. John

      The way Lebanon was set up by the French in the 1920s had the Maronite Christians holding the presidency while the Druse, Shia, Sunni, and others who, if I ever knew, I have forgotten, each had slices of power based on the demographics of the time. IIRC, there has never been another census since it would upset that balance of power. Hezbollah by itself makes the power sharing arrangements even more precarious. Israel and Syria are no help as each has its aims and designs.

      I am reminded of the saying, Poor Poland; so far from God, so close to Russia and Germany.” There must be an equivalent for Lebanon, but I do not know how to put it together. The future does not look bright.

      1. Felix_47

        Thank you John. Having spent some time in the area in the 1970s and followed from afar I think you are on to something. With a low population compared to today and a more stable government run by the Moronites the place was quite civilized. The Christians were dominant since most were under French influence. The Shiites and Sunnis were the underlings. Population growth among the Muslim Arabs and Shiites has soared since then way outnumbering the Maronites. Prosperity has been uneven and essentially absent due to population growth. But all sides see numbers as their only weapon. So the traditional balance of power…..the Christians allied with the French on top and the Shiites and the Sunnis below has turned topsy turvy and we are going to need to find a new culture to lead them and this time it won’t a European Christian one. Iran and Saudi Arabia are the two candidates.

        1. drumlin woodchuckles

          If that really is the binary choice facing Lebanon, then as far as culture and ethics goes, Iran would be a better culture-leader than Saudi Barbaria.

  10. Kouros

    The movie “Incendies”is a good metaphor for Lebanon.

    However, as someone else alluded to, not mentioning the influence of Israel, directly, and indirectly via its US Golem, makes the whole comment not serious. Or mentioning how the Caesar Act also affects Lebanon, not only Syria…

  11. David

    Just to add that one of the reasons this episode hasn’t got much coverage in the West is that it can’t easily be squeezed into the normal straitjacket of ME reporting. The idea that you could actually have a crisis in the ME in which the main players are not Israel and the US is clearly more than some pundits can adjust to: hence the silence. Of course, rivalries between Iran and Saudi Arabia (not to mention Qatar and Turkey) are not exactly news, but they are largely discussed by specialists. They are therefore a surprise when they erupt onto the world stage.

    Of course there’s a lot of history in this – too much, I would suggest. From at least the Ottoman Empire to the Mandate period to the Civil War to the Syrian occupation to the invasions from Israel to all the recent meddling, there are layers and layers of historical complexity. It’s this that makes most political problems in Lebanon ultimately insoluble. The two largest internal issues – the Palestinians and Hizbollah – cannot be resolved, and so, like lots of less significant problems, are left unaddressed from year to year, in the hope that something will turn up. The confessional-clannic structure of Lebanese politics – ultimately a residue of the Ottoman Empire – virtually guarantee that no serious problem will ever be solved.

    By the way, the story in the Cradle (which I hadn’t seen) has one potentially very interesting suggestions: that the Lebanese Forces, generally believed to be behind the massacre of Shia protesters a few weeks ago, were acting on behalf of the Saudis. The links between the Saudis and the LF are well-known, and it was suspected that there might have been collusion, but this is the first time I’ve seen it in print. An alliance between the Saudis and right-wing Christians leaving the Sunni parties to disintegrate is an idea that will surprise only those who know nothing of the country.

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