HIKMA SUMMIT
OF INTERNATIONAL RELATIONS

In the summer of 2020, the world’s eyes were on the small Republic of Lebanon, which is usually not among the protagonists of Middle Eastern news. However, the explosion at Beirut’s port brought international awareness of breaches within the country, mostly on the economic and financial crises that were throwing the population down on its knees.

Two years later, Lebanon has appeared again back in the spotlight over an agreement with neighbouring Israel about a maritime border dispute. Despite the positive headline, the country is still on the edge of a collapse, and this article aims to examine the Lebanese conditions in terms of socio-economic, energy, and environmental policies.

Lebanon Hit By The Top 3 Most Severe Crisis

According to the World Bank’s Spring 2021 Lebanon Economic Monitor (LEM) the Lebanese economic and financial crises are in the Top 3 of the most severe crises since the mid-19th century. Indeed, its GDP in US dollars has been declining steadily in the last five years, from 54.96$ million in 2018 to 18.08$ million in 2021. This means that 78% of the Lebanese population is now living below the poverty line.

Inflation at 84.3% (data from 2020) and the fluctuations of exchange rates in USD along with the restrictions on currency withdrawals are pushing people, such as Sali Hafiz, to act desperately, entering banks armed and threatening employees.

International concerns range from ineffective policy solution proposals because of institutional weakness – i.e. the country had no government for about 13 months after the port explosion – to the infiltration of terrorist groups who threaten regional security. The COVID-19 pandemic has also hit hard tourism as a leading economic sector and, ultimately, the war in Ukraine is causing widespread food insecurity. The unfortunate occurrence at the harbour damaged the national reserves and has thus led to increased imports of wheat, mainly from Ukraine and Russia. Later on, when the effects of war have been made evident, a Russian naval blockade in the Black Sea affected the supply chain, caused a slowdown, and made imports overpriced.

The Israeli-Lebanese Deal Is No Solution To The Energy Crisis

The Israeli-Lebanese border deal might induce to think that, finally, good news is on the way. Still, a more comprehensive investigation reveals that the country faces major power source difficulties, and the agreement does not cover the energy crisis at all.

As a matter of fact, Lebanon’s overall consumption relies on oil products (94%), which the country itself does not produce, and hence depends on imports from Greece, Russia, and the USA. Certainly, the settlement gives the government hope that exploration missions in the Mediterranean EEZ will succeed. However, it should be remembered that previous drillings in sector 4 had yielded no results and had even driven foreign investors away to other destinations in the Eastern region.

With this deal, Lebanon brings oil companies such as Total and Eni Novatek back in, since it holds full rights on the Qana field, except for the area that passes Line 23 where Israel should be paid unspecified royalties (and not a share of profit distribution as it would usually be agreed). The statement that this area’s gas extraction could give relief from the economic crisis does not stand because in the best-case scenario revenues would be 6bn$ over 15 years, whereas the public debt already stands at 171bn$.

In the meantime, supply remains lower than demand, and blackouts are an everyday occurrence. The IMF and other Eastern countries – Iraq, Egypt, and Jordan – have provided help for recovery in return for compliance with conditionalities. However, the government's fallacy has given the Iranian-linked (and by the USA-defined terrorist) party Hezbollah political strength and there is still no light at the end of the tunnel.

Using Deforestation to Compensate Power Failure

The endangerment of biodiversity, particularly the cedar forests, is a striking side effect of both the economic and energy crisis. Studies show that climate change is not the only cause of deforestation, human activity is a contributor as well.

Unable to afford their homes’ heating, Lebanese people are turning to wood and leaving aside the environmental issue. The illegal logging trade is expanding, and increasingly lucrative businesses are taking advantage of this commodity, also because there are no funds for enforcement personnel to patrol timbered areas.

Finally, the forest is also a place for those fleeing the war in Syria, who start fires to warm themselves and then often lose control, devastating large areas of land. For this reason, locals are reacting with an unwelcoming attitude toward refugees.

Conclusions

Lebanese state fragility needs to be observed closely from MENA regional actors, especially South European states. The failure of the cedar country would carry with it a severe humanitarian crisis, including consequences on migration fluxes. It is important to keep in mind that today’s figure of Syrian refugees on Lebanese sovereignty touches 1.5 million units and covers one quarter of total inhabitants.

To date, the sanctions applied by the EU member states against the political class to incentivise reforms could continue to be a useful tool. However, external pressures, mainly exerted by Israel, Iran, and Saudi Arabia, play a significant role in growing instability. The agreement on maritime border and oil production is a mutually beneficial step, but it should be concluded that hostilities with neighbouring Israel are not settled.