Lebanese elections spark fears of more instability

• Hezbollah is second in polling
• Foreign investors are walking away
• Few expect the election to lead to major reform

The Lebanese government recently ordered the demolition of the blast-hit grain silos that were decimated during the August 4, 2020 port explosion. The silos absorbed much of the blast’s impact, saving sections of the city’s western residential areas from total devastation.

The government has now determined that they must be removed amid reports that the tilting structures risk collapse. But some activists have called for the grain storage plants to be retained as memorials to the victims of the shocking explosion.

Their call to repurpose them as a relic ahead of national elections on May 15 has led some to suggest that metaphors for the country’s current predicament write themselves.

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“Lebanon is a crippled state. Incapable of reform because of predatory, sectarian elites, and consequently in a constant state of economic instability, there is little hope that elections — which ratify this sectarian patronage system — can alter the situation for the better,” said Kyle Orton, an independent geopolitical researcher. 

He told AGBI: “Regardless of what happens at next month’s elections, there is no reason to think it will give Lebanon a political elite that can rediscover the kind of pre-civil war success that once made Lebanon so exceptional in a positive sense in the Middle East.”

Orton added: “If there is one single factor that hampers foreign direct investment (FDI) and business confidence in Lebanon, it is the domineering influence of Hezbollah, which risks tying up any investor in legal trouble because of the sanctions or who can simply use violence to override any legal contract.”

Hezbollah, which is standing dozens of candidates in the elections, is riding high on the polls, scoring around 15 percent in gold-standard polling. It is only second to independent and 17 October Revolutionary candidates. When combined with the fellow Shia and former militia Amal Movement, the polling jumps to above 17 percent.

Together, the two groups have sparked violent protests and fatal clashes with Lebanese authorities over the investigation into the infamous port blast. The explosion has developed into a political minefield, with all of the country’s sects and political parties pointing the blame at one another for the incompetence that led to the destruction. 

Keen to protect their financial and state power interests, battling political wings have sought to incriminate their opponents through any means necessary. But Hezbollah and the Amal Movement have consistently taken measures a little further than their rivals, including firing into crowds and launching rocket-propelled grenades (RPGs) at major protests.

The rising tide of violence and threats against those attempting to reform the country has led to a drastic downturn in political stability. This has also destroyed Beirut’s historically resilient allure to foreign investors.

As recently as 2018, the country was enjoying a solid plateau of FDI inflows after rapid rises in the 00s, with the Investment Development Authority of Lebanon (IDAL) remarking on the “continuous confidence of investors in Lebanon” amid a 14 percent jump in FDI flows.

That confidence has now disappeared. In 2019, FDI inflows stood at $68 billion, but dramatically shrunk to just $17.7 billion in 2020. 

Lacking an innovative, creative business space, Lebanon has long relied on the remittances of its diaspora and their real estate purchases. Remittances have remained strong: the overseas Lebanese feel a duty to support their family members struggling at home, with $2 billion of remittances coming from Saudi Arabia alone last year. But seeing their younger compatriots protesting against corruption near-daily, they no longer have the same desire to make investments. 

The spotlight now turns to the election as an opportunity to ensure major reform, and then elicit renewed interest from the Lebanese overseas. But few are confident that this opportunity will be taken.

“There is not a lot of hope that the country can end its political impasse through the election,” said Sami Nader, director of the Levant Institute for Strategic Affairs, a Beirut-based public policy think tank.

Nader is unsure if the elections will even go ahead. “One month ago, chances were really high that the election would be cancelled. If Amal and Hezbollah feel threatened by democracy, they will cancel the election, and they have done this three times in the last decade, cancelling or postponing elections,” he said.

The policy expert added the only way to progress beyond the political impasse is for the current crop of leaders to go along with the International Monetary Fund’s (IMF) proposed programme. Last month, the IMF reached a staff-level agreement with Lebanon on economic policies for a four-year extended fund facility, with access to approximately $3 billion. 

These funds are urgently needed as the state battles with a dramatic economic contraction. The poverty rate jumped from 42 percent in 2019 to 82 percent in 2021. Its GDP has slipped from $55 billion in 2018 to roughly $35 billion today, with the price of basic commodities rocketing by some 700 percent over a similar period. 

These economic disasters have precipitated a massive brain drain. There were some 17,000 emigrants in 2019. Over 65,000 left Lebanon in the first 10 months of 2021. Beirut-based researchers expect this number to double this year amid a 150 percent increase in passport renewal requests. People are fleeing while the IMF’s vital rescue plan remains available but unapproved.

Nader warned the IMF reforms were unlikely to get the green light as Hezbollah and its allies are using “intimidation to control the show. They are not allowing the opposition to thrive.”

Lebanon needs to achieve several reforms to secure funding from the IMF, but Nader warned: “Reforms are a killer for Hezbollah, so this is the main reason for the deadlock and the political crisis. We know the way out, but the establishment cannot take it.”

After the vote on May 15, Nader expects that all parties will be weakened in the elections, with 10 to 12 new political figures making their breakthrough and a new oppositional dynamic, but no drastic changes in the balance of power.

For Lebanon, no change means more crises and a continued slump into poverty and financial ruin under political extremists.

Who is contesting the election? Plus opinion poll ratings

• Amal Movement (3%) – Shia former militia
• Free Patriotic Movement (6.8%) – Christian party
• Future Movement (6.2%) – Sunni party
• Hezbollah (14.7%) – Shia party and militia group
• Kataeb (4.2%) – Christian party
• Lebanese Forces (11.5%) – Christian former militia
• Revolution candidates (12.3%) – Candidates representing the civil society protests
• Progressive Socialist Party (2.2%) – Druze centre-left party
• Syrian Social Nationalist Party (1.2%) – Syrian nationalist party operating throughout the region
• Independent candidates are polling around 25%