According to the World Bank, "Lebanon is enduring a severe, prolonged economic depression: real GDP growth contracted by 20.3% in 2020 and inflation reached triple digits, while the exchange rate keeps losing value. Poverty is rising sharply."
This crisis happened because of three big events occurring since 2019.
The first was a financial crisis, which began in part because Mideast conflicts made it difficult for Lebanon to attract capital.
The New York Times reports, "To keep dollars flowing in, the head of Lebanon’s central bank developed a plan: Banks would offer very generous terms — including an annual interest of 15 percent or even 20 percent — to anybody who would deposit dollars. But the only way for banks to make good on these terms was by repaying the initial depositors with money from new depositors."
This Ponzi scheme failed in 2019. The COVID-19 crisis followed soon after.
Tourism was 18% of Lebanon’s economy in 2018. Once the coronavirus hit, tourism levels dropped from over 900,000 tourists in the first half of 2019 to just under 200,000 tourists in the first half of 2020.
The final blow was a massive explosion in August 2020 killing over 200, and injuring over 6,000 people. The corrupt nature of Lebanon’s political system made this disaster inevitable.
The top bureaucratic jobs are rewarded by religion and not competence. This rigid power-sharing system was created after Lebanon won its independence from France in 1943.
The reason Lebanon has not had an official census since 1932 is because the Lebanese government is based on confessionalism, a structure in which power is shared by a corrupt elite of 18 religious groups (12 Christian, 4 Muslim, Druze, and Jewish).
A confessional system is inherently unstable as demographics change over time.
In 1932, 52% of Lebanon’s population was Christian. As Muslims became a majority, they wanted more of a say in their country’s affairs.
This is what led to the Lebanese Civil War (1975-1990).
Under the 1943 National Pact, the President of Lebanon must be a Maronite Christian, the prime minister must be a Sunni Muslim, and the speaker of Parliament must be a Shia Muslim.
The seats in parliament had a religious quota of six Christian seats for every five Muslim seats. The Taif Accord (1989) changed the religious quota in parliament to parity between Christians and Muslims.
While there hasn’t been an official census in Lebanon since 1932, the latest estimates are that there are 4.5 million Lebanese. In addition to the Lebanese people, there are approximately 1.5 million Syrian refugees according to the U.S. State Department.
According to the United Nations, there are 479,000 registered Palestinians refugees, and their descendants, in Lebanon. Almost half of the Palestinians live in 12 refugee camps while some Palestinians have been granted Lebanese citizenship.
Along with its internal sectarian conflicts, Lebanon has had trouble attracting private capital because Hezbollah has 150,000 rockets and missiles pointed at Israel.
If Israel and Hezbollah go to war, there is no question that Israel would eventually win.
The problem is that Hezbollah’s arsenal would kill an enormous number of Israelis and cause a tremendous amount of economic damage, before it was defeated.
If Lebanon joins the Abraham Accords, it will avoid a devastating war and restore prosperity. Ever since the August 2020 disaster, the Lebanese have begun to show some flexibility with Israel.
Shortly after the destruction of the Beirut port, Lebanon President Michael Aoun was asked by a journalist if his country would ever make peace with Israel.
Aoun said, "It depends. We have problems that must be resolved with Israel."
In October, President Aoun’s daughter, Claudine, stressed that the maritime dispute was most important to solve due to the large offshore natural gas reserves. In 2020 and 2021, there have been negotiations on a maritime boundary between Israel and Lebanon.
Israel should give Shebaa Farms to Lebanon only after it's verified that Hezbollah has completely disarmed its arsenal of rockets and missiles.
Shebaa Farms is just 14 kilometers in length and 2 kilometers in width.
This small piece of territory is of no strategic value to Israel and only of symbolic value to Lebanon. Hezbollah has used this dispute to pretend that it's a Lebanese organization trying to reclaim Lebanese land.
In reality, Hezbollah is a subsidiary of Iran. On top of Iranian funding for Hezbollah, which was $700 million in 2017, Lebanon’s confessional system creates a demand for religious militias like Hezbollah.
In the long-run, Lebanon must end its confessional system in favor of a liberal democracy with a professionalized bureaucracy to defeat Hezbollah. Israel can afford to let Lebanon win the maritime dispute in exchange for peace.
Robert Zapesochny is a researcher and writer whose work focuses on foreign affairs, national security and presidential history. He has been published in numerous outlets, including The American Spectator, the Washington Times, and The American Conservative. When he's not writing, Robert works for a medical research company in New York. Read Robert Zapesochny's Reports — More Here.
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