US, Iran Prolong Détente in Lebanon with a Status Quo Cabinet

Ninety-five days after the Lebanese protests began, a new government led by Prime Minister Hassan Diab was announced on January 21 in the presidential palace in Baabda. In a swift time frame for Lebanese politics, Diab formed the government in 32 days as protests have turned violent, reflecting unprecedented public frustration in a country on the verge of economic collapse. The makeup of this cabinet and the circumstances of its formation indicate that the United States and Iran have extended their détente in Lebanon and that the new government represents a continuity of the status quo with the ruling oligarchy running the show behind the scenes.

Since 2014, Washington and Tehran have maintained an understanding in sharing influence in Lebanon. The arrangement preserved the weapons of the Iranian-backed Hezbollah while the United States provided support and assistance to the Lebanese security apparatus—mainly the military—as well as the banking sector. These parameters of the Lebanese political system have largely remained the same and are shaped by the US-Iranian tacit understanding. While the new cabinet neutralized the 2016 presidential deal that brought General Michel Aoun to the presidency and Saad Hariri to the premiership, it did not fully erode the cornerstone of the ruling oligarchy in Lebanese politics, which includes a coexistence between Hezbollah, the banking sector, the security apparatus, and the traditional political class among other lobbying groups.

The parameters of the Lebanese political system have largely remained the same and are shaped by the US-Iranian tacit understanding.

The Status Quo Government

Hassan Diab, an academic and former education minister, was selected as a technocrat by default after Hariri came under public pressure and resigned in October 2019. The new premier managed four achievements, albeit cosmetic ones, in the cabinet formation process: 1) assembling an all-technocrat cabinet of ministers, though they are not fully independent as protesters have demanded; 2) ensuring that no ministers from the last government of former Prime Minister Saad Hariri returned; 3) excluding official members of the ruling political parties or parliamentarians from serving in this cabinet; and 4) reducing the number of serving ministers for the first time in decades, from 30 to 20.

From a political perspective, this cabinet is largely a product of the March 8 Alliance that includes President Aoun, Parliament Speaker Nabih Berri, and Hezbollah. At the same time, it reinforced the growing divide between Hezbollah allies, as they struggled to form the cabinet, as well as prompted the collapse of Hariri’s relationship with his allies including1 Lebanese Forces leader Samir Geagea. Hariri believes that Geagea’s position2 was not supportive to him when Hariri resigned under Saudi pressure while in detention in November 2017 in Riyadh, and that Geagea did not name him3 in the parliamentary consultations last December, which played a role in Hariri’s decision not to return to power. The political rivalry between Hezbollah allies will persist in the Diab government as the 2022 presidential election looms large and there is no consensus on who will serve as the next president after Aoun. Berri and Maronite leader Suleiman Frangieh, among other Hezbollah allies, want to prevent the election as president of the former foreign minister, Gebran Bassil, who is also Aoun’s son-in-law.

While Hariri is not officially and directly represented in the government, his political interests are preserved.

While Hariri is not officially and directly represented in the government, his political interests are preserved. Druze leader Walid Joumblatt is also indirectly represented4 by the information minister, Manal Abdel Samad, who is close to him—or at least he did not object to her nomination. Two days before announcing the Diab government, Hariri tweeted on January 19: “Stop wasting time, form the government and open the door to political and economic solutions” while Joumblatt tweeted5 that “any government is better than the vacuum because what is coming is even more difficult.” The subdued reaction so far of Hariri and Joumblatt to the government’s formation reflects their tacit approval.

The Central Bank, and consequently the Lebanese state, owes $67 billion to Lebanese commercial banks; while it is noteworthy that the Central Bank only had $31.5 billion in foreign reserves at the end of 2019. Commercial banks have been imposing capital control, limiting the ability of their clients to withdraw cash from their accounts, and this has caused public frustration against banks across the country. The appointed minister of economy, Raoul Nehmeh, is the executive manager of Bank Med, which was once fully owned by the Hariri family before Saad Hariri had to give up the majority of shares to the Jordanian-born businessman Alaa Al Khawaja, the person who has been helping Hariri avoid bankruptcy. Being a close associate of Khawaja, Minister Nehmeh represents not only Hariri’s interests but also the interests of Lebanese commercial banks at large. Khawaja is reportedly6 playing an influential political role behind the scenes, including mediating to sustain the alliance between Hariri and Bassil.

On the other hand, the finance and industry ministers were given, respectively, to technocrats close to the Berri-led Amal Movement and Hezbollah—two political parties with a stated populist approach to the economy. The affluent banking and business sectors, backed by Hariri and Bassil, have clashed in the last few years with Berri on who should pay to reduce the $89.5 billion gross public debt; this led to a paralysis in the last government and prevented economic reforms.

There are two perspectives in Lebanon on how to pay the public debt: some argue that the commercial banks that have largely benefited from the economy should pay their share while others assert that broadening and enforcing the tax system is the way forward. This impasse will most likely persist as there is no synergy of ideas and interests among those who hold key economic and fiscal portfolios. Berri made sure that the parliament passed the national budget presented by the last Hariri government, which led to the protests last October; this is despite some constitutional concerns7 that the Diab government is presenting a budget that it did not draft before gaining the parliament’s confidence. These contentious debates between the neoliberal policies and the populist approach to the Lebanese economy are far from being resolved and will continue to undermine any potential reform agenda.

These contentious debates between the neoliberal policies and the populist approach to the Lebanese economy are far from being resolved and will continue to undermine any potential reform agenda.

On the security sector, the interior ministry was given to Mohammad Fahmi, an official with a military background. Fahmi made it abundantly clear that he will not remove Hariri’s man8 in the ministry, the director general of the Internal Security Forces Major General Imad Osman, who has been criticized for the way he handled the protests in recent weeks. Moreover, if the protests continue, there are indications that the interior ministry might take some coercive measures moving forward if the cabinet announcement failed to appease the protesters.

For the defense ministry, the appointment of Zeina Akar Adra (who has no defense background) was due to her close relationship9 with the US embassy in Beirut. Unlike the former defense minister Elias Bou Saab, who had a contentious relationship10 with the commander of the Lebanese Armed Forces, General Joseph Aoun, Adra is expected to reinforce the idea of giving General Aoun a free hand in running the military. This will only come at the satisfaction of the US administration, which sees the Lebanese military as a counterbalance to Hezbollah. A second crucial issue for Washington is keeping in office the head of Lebanon’s Central Bank, Riad Salameh. Once Salameh came under public pressure to be held accountable, on January 15 Hariri affirmed that “the central bank governor has immunity and no one can sack him.” Salameh cooperates with the US Treasury Department on a wide range of issues, including the implementation of US sanctions on Hezbollah.

US-Iran Dynamics in Lebanon

The notion that the new government reflects Lebanon’s complete shift to the Iranian axis does not tell the full story of the new cabinet: most notably, that 12 out of the 20 ministers reportedly hold a US passport.11 Indeed, the new government indicates that the United States and Iran continue their détente in Lebanon. US Secretary of State Mike Pompeo said that he “does not know the answer yet” as to whether Washington will work with the new government, and he linked US support to “real and tangible reforms.” However, the fact is that both Washington and Tehran are far from committing to any genuine path to reform in Lebanon moving forward. Most importantly, Pompeo did not say that Diab is leading a Hezbollah government or hint that US support is linked to how much Hezbollah has influence over this new cabinet.

The notion that the new government reflects Lebanon’s complete shift to the Iranian axis does not tell the full story of the new cabinet.

Given the dire economic situation in Lebanon, there is an increasingly plausible scenario where the United States and France might deal with the Diab cabinet as a de facto government, while keeping the stated US position ambivalent as leverage to shape the government’s policy on key issues of concern for the Trump Administration. The overarching task of the Diab government is to manage the looming economic collapse and not to shift the power dynamics in Lebanese politics or call for an early parliamentary election.

Despite the regional tensions between Washington and Tehran, for now the United States is not making Hezbollah’s weapons and status as an armed group the central political issues facing the new government. Neither have Iran’s allies in Lebanon shifted to an offensive posture by removing officials close to the United States from key positions in the Lebanese state. This détente will provide some political and security stability in Lebanon as the country faces a looming economic collapse. It might also mean that the status quo will remain the same for the foreseeable future with no clear path to genuine reforms.

The wild card remains the protesters who are turning to violence as a last resort given their inability to change the existing political system. Hariri and others might exploit these protests for their own political benefit, but the protesters seem determined to continue voicing their demands. This uprising has reached a critical moment, one that requires the protesters to reinvent the uprising and shape a political platform—or at least frame its demands and structure more fully. The no-confidence crisis between protesters demanding their basic rights and a ruling oligarchy not ready to give in is widening against the background of profound structural problems facing the Lebanese political system.

Joe Macaron is a Resident Fellow at Arab Center Washington DC. To learn more about Joe and read his previous publications click here

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