Corruption, Mismanagement and Neglect – Unpicking the Causes and Consequences of Beirut’s Port Explosion

Dr Lina Khatib

Hello, and welcome to everyone who’s joining us this afternoon for a very timely discussion on the situation in Lebanon in the aftermath of the Beirut explosion that happened in August this year. Lebanon is suffering from a collection of problems to do with corruption, mismanagement and neglect, among wider issues, and I’m delighted to be joined by three eminent Lebanese experts to discuss the economic and political and social situation in Lebanon today. Of course, today is the 19^th of October, and almost a year ago, the 17^th of October, Lebanon witnessed the start of protests that were fundamental in the modern history of the country, and that, at the time, were hoping to bring the country towards a path of reform. But here we are, a year later, with the explosion having been a really awful landmark in the country, and the situation in Lebanon is rather tense.

So, to help with the discussion of what this all means, I am delighted to welcome Alia Moubayed, who is the Managing Director for Europe, the Middle East and Africa, Economics and Strategies at Jefferies International in the UK, though she’s joining us from Beirut, Paul Salem, the President of the Middle East Institute, and, last but not least, Joseph Bahout, who’s the Director of the Issam Fares Institute for Public Policy and International Affairs at the American University of Beirut, and also joins us from Lebanon today. I am Lina Khatib, the Director of the Middle East and North Africa Programme at Chatham House.

All four of us have been, at the very least, closely following what is happening in Lebanon today, and we welcome everybody’s questions and comments throughout this hour that we’re here together. There is an option for people to unmute themselves and ask a question through audio, if they wish, but, otherwise, you can ask your questions in the ‘Q&A’ function available at the bottom of the screen on Zoom. Just to remind everyone, obviously, this is a Chatham House members’ event, which means the event is being held on the record.

So, let’s just start by reflecting on where Lebanon is today. Paul Salem, you are in Washington, DC. I don’t know if the mood there even allows for, you know, the administration to be thinking about Lebanon these days with the US election looming. However, you were someone who was on the ground in Lebanon a year ago, and you’re very involved in the – in this situation, and so, from your perspective, what’s your diagnosis of where Lebanon stands now, politically?

Paul Salem

Well, thank you, Lina, and it’s lovely to be on this panel with my good friends also, Alia and Joe, from Beirut, and welcome to the audience. Yeah, I happened to be in Lebanon at a conference when the protests erupted on October 17 of last year, and it’s been a very, very dramatic and also very, very difficult year, with very complex developments. It’s certainly the worst year for Lebanon, at least since the years of the civil war, with multiple crisis. One is the collapse of the economy and the banking system, the loss of much of people’s savings, the collapse of the currency, so great social and economic distress, a massive pandemic, which hit the entire world, but it hit Lebanon, and Lebanon is now going through a difficult second or third wave. And then, uniquely, the terrible port blast in August that affected hundreds of thousands of people in Lebanon, so really an annus horribilis, as Queen in England said of a recent year.

A quick analysis, I mean, I would say on the side – on the – of the governing system, the governing system has sadly entered a very deep crisis. Part of the crisis is due to the collapse of the economy and the banking system and the currency under its watch. This is a system that is based on patronage, so the less pe – less money the oligarchy has, the more difficult it is for them. But also, the port blast, partly linked, directly or indirectly, to the great influence of Hezbollah, has really wounded the alliance between Hezbollah and the main Aounist movement, the Christian party, which changes Hezbollah’s calculations in the country, and we’ll probably get to that later. This is a system that is in great distress, the population, or some cross-section of the population, has risen up against it, questioning the last 30 years of governance. This is also an oligarchy, some of which are old, people like Nabih Berri, and Michel Aoun, and others where, like we’ve seen in other Arab countries that, you know, generational challenges and generational change becomes relevant.

On the side of the uprising, I think it – as you indicated, it is historic. We haven’t seen this level of public organisation and protests in Lebanon maybe since the 1960s, so it is very historic, it is very important. It has been very impactful in effecting the collapse of two governments, really putting the ruling class under great stress. It didn’t break them, but it put them under great strain. I will say that this is a section of the population that is beginning to realise that citizenship means action, because we must not forget that the oligarchy was recently elected to office and might be elected again, unless the population organises itself and does something different. So, I think this is a population that’s beginning to realise that citizenship, democracy, means action, doesn’t mean just showing up and renewing the mandate of your traditional ruler. It’s only been 12 months, so it’s – you know, one doesn’t want to be too harsh on assessing how far we’ve come.

Obviously, there’s been a lot of achievement, in the sense of pressure, and creating a political power that did not exist 13 months ago, and that’s a major achievement. As many, you know, who are involved in the uprising itself admit, it’s still too divided, it still doesn’t present a very clear alternative, in terms of leadership, but it’s only been 12 months, so let’s give it some more time.

And I would also say that this type of movement has two levers of power. One lever of power is elections, which, hopefully, if they’re not postponed, happen in 2022, so a year and a half from now, and organising for that is important. But perhaps the more lever historically is mass protest, that mass protest itself is a tool that this movement has used effectively. It is a movement now impacted by, you know, COVID, and impacted by the blast, and it’s been a very difficult year for a protest movement, but, nevertheless, it persists.

So, I’m very, very concerned about where Lebanon is. The IMF just estimated their economy will contract by 25%, which is unimaginable, in terms of its consequences. But that also means that the oligarchy will continue to be in extreme distress, and that the population will be in extreme anger. If we can turn that into positive change, that would be great, otherwise it might be conflict disintegration and more negative things. Thank you, I’ll stop there.

Dr Lina Khatib

Thank you so much, Paul, and, as you said, there’s a lot that you mentioned that we’ll hopefully dig further into throughout this conversation. But I like that you still managed to find, let’s say, positive things to say about the situation in Lebanon, which is the expectation that street protests are going to transform the system overnight is perhaps a tad unrealistic. It’s only been 12 months, as you pointed out, and the challenges are immense, including what you mentioned, the alarming figure given by the IMF, which leads me to go straight to Alia on the economy. Obviously, the situation in Lebanon is really critical, especially in the aftermath of the port explosion, so how has the port explosion impacted the existing economic crisis, and where does Lebanon find itself today?

Alia Moubayed

Sure. Hi, Lina, I’m very happy to join. This, I think, the port explosion, has just deepened the – all the elements and the – of the crisis that Paul just talked about. The economic crisis has become worse, mainly because the blast hit a central nerve of the Lebanese economy, which is its port, and a critical sector of the city, where actually a lot of very high value added services and production actually is the heart of it.

Second, obviously, the crisis also has – because of what it had worse than the COVID crisis, which Lebanon is now grappling with and seeing, any gains that were made at the beginning are being reversed. But it also has deepened the social and the political crisis, and mainly because of a prominent feature of the government’s response to these multiplicity of crisis, and that is complete ineptitude and inaction. And I think, to see that res – the absence of such a response to an important development that shook the economy, society, that killed hundreds of people, and displaced hundreds and thousands, that speaks to the gravity of the situation. Because, as we look into the future, the inability of the state to deal with these worsening and deteriorating economic, social, and [audio cuts out – 13:48]…

Dr Lina Khatib

I think, Alia…

Alia Moubayed

…vices and now, the need…

Dr Lina Khatib

Alia, excuse me, your connection is quite unstable, so…

Alia Moubayed

…estimated to cost at least five billion.

Dr Lina Khatib

Okay, I don’t know if you can hear me, Alia. Your connection is unstable. It might be better if Alia switches her video off, just to see if we can at least hear her for now [pause].

Alia Moubayed

[Audio cuts out – 14:28] just saying that, as we looked at the government and the very light response that it has shown in dealing with the multiplicity of this crisis, raises the perception of risk even forward, not only for the Lebanese citizens and the Lebanese businesses, but also, I think, for the international community who is here and has shown an ability and a willingness to respond relatively quickly to the gravity of the situation.

So, I think where the economy is going today is function of this response because the situation, since last October, has actually deteriorated because of two things. One is because the government that were previously in place either have not come up to the – to respond to the signals and warning signals about the economy since 2016. And, second, throughout 2019, they have actually, even when we had a government in place that brought forward a financial rescue plan, whatever is our criticism about it, but the system has shown its ability, the same system who sponsored the path to a potentially orderly exit of the crisis and a – and the engagement with the IMF towards talks for – towards a programme.

Actually, the system itself has obstructed the solution and has sabotaged, that you can say, because it finally came to realise that any solution that requires fundamental deep reform will mean it’s – the own demise of the existing political class and, therefore, the inability to move forward with rescuing the economy.

So, here we are, we are facing now two scenarios [audio cuts out – 16:38]. The first scenario is one with enough credibility and competence, but also able to regain both legitimacy and win the trust that was lost by the Lebanese first to manage those multiplicity of crisis, and notably the economic and financial one. But also, given the amount of losses and the fi – huge financial needs that are both needed for the adjustment and exits from the crisis, but also for economic structure. That is obviously the best case scenario.

The worst case scenario is one where we – a lack of response, ad hoc of Lebanon, that have been weighing on both the currencies to increase devaluation, hyperinflation, a loss of human capital through a massive exodus of the Lebanese bright youth, but also financial capital towards the to the rest of the region, and therefore, what we call a slow death that will keep Lebanon, for a long time, in a worsening death trap. I hope we will be able to move that towards the first scenario, but I have my doubt that we will be able to do so, if there is no fundamental change in the modes of governance and in the trust deficit that has just gone increasingly worse and worse.

Dr Lina Khatib

Thank you so much, Alia. I mean, here we have a conundrum. What you’re saying is the political class, who happen to also be the ruling aids of Lebanon economically, don’t seem to want to engage in reform because that would threaten power in Lebanon, and the way it’s configured, which means they would lose power were Lebanon to fully reform. But, at the same time, what Paul was reminding us in the beginning was that the economic situation is also hurting some of these oligarchies, so it’s not like they’re entirely comfortable in this new economic crisis either. So, my question to Joe now, with these two, kind of, dynamics going on, where does the international community stand, in your view? Could there be something that they could capitalise on here in a, kind of, carrot and stick, perhaps, way, to try to use these two dynamics, in order to push for perhaps some reforms, but maybe not full, you know, reform, as an incremental step forward for Lebanon? What’s your diagnosis from where you stand?

Joseph Bahout

Yeah. First of all, thanks a lot, Lina, for putting up this webinar, this gathering, with very good friends, and I’m happy to see them all and to see you, and I hope that we’ll be able to do more joint events between IFI and Chatham House in the future.

Now, your question is I think directly to the point, if you look at today, first of all, the French Initiative, what was called the Macron Initiatives, and also the chasm or the gap or the slight divergence that sometimes is not very slight between the French and the Americans over Lebanon. This leads me to say very directly to your question that, first of all, I don’t think that they – there’s a unified homogeneous position of the international community over Lebanon. Of course, more globally, the concept alone of international community today is something to be a little bit questioned in the global order within which we are functioning. Look at Syria, for example. Over Lebanon, there was a slight consensus so far that was mainly about the idea of stability of the country, recovery, help to gradual reform, etc. I think that this consensus has more or less exploded, or at least weathered away, something like two years ago.

There’s something very important that we often overlook, in fact, in Lebanon. The American approach, and mainly the Trump administration’s approach, on Lebanon, has been one of severe disruption for the past two years. It’s very much in line with the maximum pressure strategy that is on Iran, and I don’t think we would exaggerate by saying that in Washington, Paul probably will add to that or maybe correct me, but there’s no Lebanon file, per se. There’s a Lebanese chapter within an Iranian strategy, and this chapter is mainly about Hezbollah, the pressure against Hezbollah, and so on.

Now, there’s a debate within the administration in Washington over how far to go with that. You know, there are voices that are saying Lebanon equal Hezbollah, so we have to treat Lebanon entirely like Hezbollah, and others who are pleading for a soft, let’s say, buffer between the two. But, overall, this is the American approach, whereby the French approach is much more, first of all, gradual, it’s much more nuanced, it’s much more also probably putting the economics first before politics by acknowledging that deep structural political reform are today impossible and probably not mature, the time is not right for that.

So, France should and would, because it also has a special bond to Lebanon, maybe prevent the country of completely collapsing and dying. So, we keep the comatose situation as far as we can, or as long as we can, with patch-ups and etc., and we wait for better times regionally. This is, I think, the two poles internationally that are surrounding Lebanon. Both of them, of course, do not bode well for the country because both will not salvage the country from the material structure really, which means also, and I think we all agree here, that the main homework has to be done by the Lebanese themselves, with the limits and the caveats and also the limitations that Paul have underlined, that Alia has underlined, on the economic aspect and so on.

Now, on this issue between economics and politics, I think one of our friends and colleagues [inaudible – 23:55] a few days ago, has summarised it very well, in fact, in an Op-Ed in [inaudible – 24:03] by saying that, in fact, the problem is that we need – you need a minimal consensus politically, in order to tackle the minimal reforms needed to prevent the country of dying and, at the same time, the absence of any economic, let’s say ball of oxygen in the country is preventing any political vision to be put forward and to be clarified and elaborated.

So, we are in a very cruel catch-22, in fact, between economics and politics, and also, another catch-22 between having to wait for the regional developments to unfold, in order to know where the country is heading or where the country could head and, at the same time, the rapid pace of everything collapsing, from economy to the political system, but also to the moral structure of the country. Here we probably will talk more about the blast in a moment, but the blast, I think, was a symbolic blast more than – of course, it was a terrible physical blast for the country. But symbolically also, it showed how much the country is rotten from the inside, even from, I mean, the day-to-day issues that Lebanese are tackling, and this is as societal as it is state-focused. Really, the country, when you live in it for a long time, appears to you as almost unmanageable anymore, and you often wonder if it’s still holding by miracle and how much and how long it can hold on like that.

So, we are racing with very complicated things, the regional situation, the economic collapse, international neglect or fatigue also, because the Lebanese have, I think, fatigued the entire world around them and, at the same time, there’s a state of denial in the political class. And I should say so, at the risk of being a bit severe, a state of denial from the society or the political movement and the revolution that they’re still functioning as if it had time, and the excuse of saying, “We didn’t have time to organise and etc.,” was maybe true a few months ago, but it’s no longer true today. A year have passed, and also the COVID, which could have been an alibi or an excuse, was, I think, in enough time at home to work on programmes, on organisations, on structuring of the movement, and this has not been put to the benefit, and I think that today a very lucid reckoning has to be made. I think we have to be accountable to the – of course, the political system, but also, to ourselves and to our own, let’s say, procrastination towards all this.

Dr Lina Khatib

Thank you so much, and, yet again, of course, you’re pointing out a very important point, which is the shared responsibility. It’s up to the Lebanese and it’s up to the international community, with all the caveats around the term ‘international community’. This – I mean, all three interventions so far bring up so many issues. One of the issues is – and, again, I’ll stay with you, Joe, and then I want to turn to Alia. Do you think, Joe – ‘cause you’ve worked a lot on Syria, obviously, do you think that, and this is a question that has been sent from Trisha de Borchgrave, “How fearful are Lebanese citizens that pushing the Lebanese ruling elites might eventually turn Lebanon into another Syria?”

Joseph Bahout

Yeah, this is an over – an always-looming question, not only in Lebanon, but I think in the entire region. Of course, for Lebanon, it is Syria, but, you know, this is also the classical autocrats, let’s say blackmailing the region, it’s me with all my awful deeds, or and this chaos, bloodshed and etc. You could hear this in Egypt, you could hear this in Iraq, you hear it in Algeria because the memory of the war in Algeria is still vivid, and you always, daily almost, hear it in Lebanon by saying, “Look, beware, look at – around you and look at Syria. Do you want this fate?” and etc.

Of course, the – look, I mean, of course, even if you don’t accept or go along with this kind of blackmail, you have at least analytically, and we are Analysts here, to accept that, yes, our societies are volatile, our systems are fragile, and we have a history of violence, we cannot deny that, but, at the same time, I think that several things also differentiate Lebanon from Syria. Of course, Syria and Lebanon are diverse societies and heterogeneous societies. The difference, and this would maybe shock certain people or be counterintuitive, but probably because Syria has denied, for a very long time, its own diversity, it has gone maybe through the experience of violence, once the state has cracked and has loosened up and has disintegrated. Whereby the acknowledging and the acceptance that Lebanon is diverse, the lucidity we have over our differences, the way we have to ackno – to accommodate them historically and etc., maybe is something that this time could save us against all demons and the dangers of getting to violence again.

The second thing is, as – and you said it, and I think your question to Alia and what Alia said is interesting also. The positive and the popularisation of Lebanon, the end of the claim ballistic networks because of the end of money and etc., I think Paul also said it, is maybe, but this should be questioned, is maybe also an impediment, or at least a limit or a frame to the temptation by some [inaudible – 30:32] and some political leaders to go along the game of violence and mobilise people and arm them. I think that, to entertain a militia, you need a lot of resources, resources that today are rarefied.

Also, if you add to that probably so far and God bless God, the non-will – the unwillingness of the regional players to go that road and to nourish, in fact, the violent networks in the country lead you to say that, if there is violence like Syria, it will be a low-scale sub-social violence of day-to-day life, either social, economic violence, and rage against certain, let’s say, owners or certain well-to-do people, you break a bag here, you throw a stone or something against a nice hotel in downtown, maybe tomorrow we’ll witness some kidnappings or some robberies on the streets and in – on remote areas in the country. But I don’t think that we are today on the verge of an organised civil war, a cycle of what Lebanon has lived since – and between 50 – 75 and 90, and also, like, what Syria has lived. I hope I will be proven right, I’m not sure about that. All it takes is the will of certain regional and international player to ignite something, and all it takes is the folly of two or three potent political forces in the country to play on this kind of adventurism, but, again, we are not there yet, but this danger is there.

Now, a last point on the narrative. As we said, this is the classical narrative in Dahab region, it’s us or civil war. I think that one of the insufficiencies, and probably the shortcomings, of the revolution, is that it has not built the counternarrative solid enough to counter this one. I think that this was one of the tools of the counterrevolution in Lebanon, with sectarianism, with probably playing on the fatigue of the middleclass, because the middleclass, by definition, is not a revolutionary segment. But, on the top of that, I think the third weapon that the political class has used is this constant fear of sedition, violence, [inaudible – 33:04] etc., and the civil society, the revolution, opponents, etc., have not built enough, to my feeling at least, to my sense, enough counternarratives that could square this, that could counter that, and that would oppose a brighter and more optimistic, let’s say, roadmap for the fence sitters in society.

You know, in these moments, you have 20% of people who are really behind the revolution. Probably 20% of the people who are behind the political class because they are tied by clientelistic interests and network, and you have 60% of people who are fence sitters, who go to the streets when there’s a demonstration and then go back home and get back to their usual life. And these people who will wait for – to see where the balance will fall and where the balance of power will go, and then they will decide on their positioning. And these people have not been captured enough, I think, by the revolution so far.

Dr Lina Khatib

Okay, thank you. I want to give Trisha an opportunity, if she wants, to follow-up on the question on Syria. Trisha, if you’d like to follow-up with an audio comment, please feel free to do so.

Trisha de Borchgrave

Thank you very much, guys. I did want to follow-up with something and, for some reason, it’s gone straight out of my mind. Oh, yeah, I did want to ask you is there an element of women in this? Because we’re seeing what Belorussia is – what, you know, women are doing in those demonstrations in Belorussia, in Thailand, this is becoming very much a movement. I mean, we’ve had a lot of movements, and sometimes they peter out, including in the States. Do you see a particularly female perspective here that might be succeeding in pushing some of that very patriarchal way of thinking? Is there enough pressure there? If you could answer that, that’d be great, but thank you for your initial answer, as well, it was great. Thank you.

Dr Lina Khatib

Thank you, Trisha, and, actually, we have another question that I’d like to take also live from Janine Freiha, because I do want to turn to Alia, regarding the Lebanese perspective on what can be done. So, Janine, why don’t you go ahead?

Janine Freiha (Daughter)

[Pause] Hi, I’m Janine’s daughter, and I’m actually a student at Columbia, studying history of the Middle East, with a concentration in Lebanon. And I think my question is that, right now, we have this rhetoric where the Lebanese people have to do something and, you know, it’s our job because the international community doesn’t – I mean, they have obviously their interests when coming in, but when knowing that, in the past, when people have tried to do something, they often either have been killed or have been put in a position where they’re not able to achieve anything or come out corrupt. I mean, what is it that we can do in order to, you know, move forward, knowing that we have a mountain of obstacles that just doesn’t allow us to basically achieve anything realistic? That’s, kind of, yeah, where my question is based.

Dr Lina Khatib

Thank you so much. So, to Alia, I mean, really, we’ve heard a lot about what the international community can do, they seem to want to help, but perhaps they’re not going to be able to help too much, but the burden is really on the Lebanese, so what should Lebanon do to scale up the support of the international community? What should it do, and what can it do? Which is the question we just heard, and also the issue of women I think is a very important one, especially that, for example, various names of women have come up in discussions about cabinet formations, for example. But this does not necessarily mean that Lebanon is suddenly becoming more inclusive in that regard, so I’d love your take on this issue.

Alia Moubayed

[Pause] Sure. Thank you, Lina. On the issue of what can be done, I think, again, on the economics, I think nothing can be done if we – and this is maybe where I a little bit disagree with our friend Euan, if we don’t have a minimum of the politics fixed, and what I mean by the minimum is a Cabinet that people can recognise that are able to lead forward the reform process. Why is that so? It’s because what is awaiting us in terms of sacrifices, at least on the economic and social front, is just huge and, despite the fact that the Lebanese have sacrificed a lot over the last year, losing 80% of their purchasing power with hyperinflation, with exchange rates. So, as the fast-forward requires more sacrifices on the economic front, I feel it’s extremely difficult to start with – on – to start without a minimum of accountability, and that starts by ensuring that the pillar of governance and accountability should be front loaded with or without an IMF programme.

I mean, we have seen, in Ukraine and in other countries around the world, where reforms related to judicial independence, a solid public investment and public financial management systems are all put in place as prior actions, in order to gain, if you want to call it the ownership of the citizen need for any harsh reform and economic adjustment programmes, and that is where we need to start, in answering the question that was put. This is also important because international community has actually [audio cuts out – 39:50] and that a system that is really now of losses in its own financial sector cannot be trusted to channel funding.

And this is why the international community, in this interim period for the reconstruction response, has chosen to go out of a regular state funding channel towards civil society and more vetting of credible and trusted organisation that can deliver on the services and through which the channels can be done. So, we need this accountability and strengthening of institutions, in order to bring back also the funding both from the international community, but for that matter from the diaspora, who has been the main supporter in the last few months, at least, since the blast.

Now, I will not go through all what needs to be done on the economic front, I mean, but what I will say is that I think we need to move on four fronts in parallel. First one is really, stop the bleeding, stop the bleeding by, again, managing, in a strategic manner, the very little foreign exchange reserve that is still sitting at the Central Bank, but which is actually the money of the depositors, and this is why we need the capital controller, we need to rationalise the subsidies that is haemorrhaging these resources, and moving across the borders into organised smuggling routes.

The second path is the recovery and reconstruction by engaging with whatever money has been pledged at the Paris Conference recently, the 300 million, of which I think 50 million has been dispersed, and continue this engagement through a solid, well-co-ordinated donor co-ordination between – with civil society and the Islands of Excellence in the Lebanese state.

The third parallel path is put back on track the financial and fiscal economic and social recovery plan that has been started by the previous government, updated to take into consideration the tough past blast realities, but, most importantly for me and for the youth, like Mrs Freiha is asking, is really coming together to build the new vision of the future, including the reconstruction of the port on which I see a question. I think it is extremely hard to anchor ourselves in any future economic and social contract and model, without really making the effort and asking ourselves what is the new role of Lebanon in the – in a very fast changing geopolitical and geoeconomic context?

The Port of Beirut, I agree with the question, cannot be reimagined as it was before. Actually, it was underperforming by any KPI that you put to a port. We need to rebuild it smaller, lighter, and we need to make it a more agile, probably run by the – a combination of bright Lebanese, but also, a sponsored post by the best border and international companies, look at where Lebanon’s comparative advantage is. This is the fourth pillar in which we need to anchor the exit of this crisis, i.e. we need to anchor our financial and economic reforms, to lead us towards the new Lebanon and economic model that we need to all think about.

Finally, on women, I think women have been a key driver of the revolution, but also, of a lot of the solutions that have been put forward to mitigate the impact of the multiplicity of crisis. Women have been on the forefront of the protests, of supporting, throughout. They have been in all professional association, particularly Engineers, Lawyers, in coming to the response of the blast, but also, in responding when the state has acted with a state-like – with a police state-like, heavy-handed response to protestors, so you have seen women Lawyers in front. But I think also, women have been participating in the political – new emerging political forums more forcefully and more assertively, and this is why I am – not only because they are women, but also, because these are voices that, for a long time, have not been heard or have not taken the realm of implementing solution in the country for the last 30 years.

Dr Lina Khatib

Okay, thank you so much, Alia. I really want to turn to Paul. Someone from our members, Dina Mufti, asked a question on where – “Why there hasn’t been an independent international investigation into the cause of the explosion?” And my own, of course, mind brings me to think about the role of Hezbollah, and perhaps not being so keen on such an investigation to take place. So, Paul, back to you on the Hezbollah question, considering that you also raised it in your opening remarks. Cabinet formation processes, supposedly derailed by Hezbollah and sustained on the Ministry of Finance. How do you diagnose Hezbollah’s position today in Lebanon? Is it really the Kingmaker still, or is there a possibility, with the economic pressure, and happening right now to, kind of, have Hezbollah play politics for once?

Paul Salem

Yeah, well, on the issue of the investigation, I would prefer that that question might be directed to an International Lawyer, I don’t know the legal process of that, but certainly, politically, two things I would say that, you know, traditionally, countries would want the co-operation of the government in place for any international investigation. And, clearly, Hezbollah and everybody else does not want an independent investigation because somebody’s responsible for it, or many people, and they’re all in the country and nobody in – you know, none of the ruling parties want that. Also, internationally, you know, the different countries have different interests. The interest isn’t, per se, to get to know who was responsible for the blast, they have particular interests.

But let’s get to your core question of Hezbollah. I’ll say a number of things, that certainly Hezbollah, since it effectively moved into direct governance in Lebanon, having its ally become President and bringing in Saad Hariri it’s, sort of, under their protection. After the fallout with Saudi Arabia, they had an entire government that was made up of their clients or junior allies. That was – I think the lesson for them is there’s positive things, there’s negative things. The positive is that they can control what’s going on in the country, the negative is now they are held responsible for a lot of what’s going on. It was obviously remarkable in the protests that Hassan Nasrallah and Hezbollah themselves were directly, you know, and publicly attacked. This was breaking a taboo that had existed for a while. So, certainly, there is some, you know, responsibility and maybe discomfort there.

It was interesting to see how they dealt with the Macron Initiative, and I would, you know, maybe get Joe’s perspective as well, but, initially, one sensed kind of an openness and a positivity and a sense that this was not a threat to them. Particularly, that President Macron was rather, you know, forthcoming and met with members of Hezbollah and so on. And it’s interesting to me that, when the US began to use sanctions and began to play tough, they appeared to react by playing tough as well, and I think, you know, part of their calculation came to be, “Well, if we make a deal with France, that means we’re making a deal with the West, we bring in the IMF, the West is coming in, and that’s a threat to our overall control.” I think they, Riad Salamé, Governor of the Central Bank and others, you know, I’d like to get Alia’s input, but, as the dust was settling on the economic disaster, I think, sadly, they calculated that, well, life could go on, people would be definitely poorer, the revolution is not succeeding, they could rearrange themselves as a ruling class over a much poorer country, and that life could go on. And I think that’s where, you know, they figured that they don’t need necessarily – that they can survive without a Western compromise, without a Western deal.

And what strikes me most about what’s happened in the last few weeks, and because obviously you have to read Hezbollah’s behaviour all in the perspective of, you know, also then reading the US elections and who’s going to be next in the White House. And the real threat there was that the Trump administration was going forward with sanctions, and they issued two sanctions, which were very close, so obviously to Politicians, and the next salvo would likely have been the big Politicians themselves. And I think in a clever move by, you know, Hezbollah, and their, you know, junior partner [inaudible – 50:05] was to shine two shiny objects in front of the Trump administration to get them to change their mind.

One is, “Okay, we’ll talk to Israel,” which always trumps anything in the US administration, so everything is put on hold because Hezbollah has agreed effectively, to discuss with Israel maritime borders, which relates to Israel’s interest. That was the first, kind of, masterstroke, which put sanctions completely off the table, until the Trump administration maybe leaves office in January and then the Biden administration won’t use those approaches.

And the second shiny object that Hezbollah has in its pocket is they have hostages in Syria, and now the head of, you know, General Security Intelligence in Lebanon is in Washington, giving out some tips, you know, “We’ll give you, you know, this chip here, this hostage there.” Keep in mind, President Trump’s National Security Adviser, Robert O’Brien, he’s a Hostage Negotiator, that’s his history. Keep in mind that, for Trump, releasing a hostage, whether it’s in Turkey or Syria, for electoral purposes, is much more important than what happens to Lebanon or anything like that.

So, Hezbollah, I think, has cleverly neutralised the Trump administration, and is waiting to see, if the Biden administration comes in, the Biden administration promises to reach out to Iran and Tehran and reopen talks, maybe resume parts of the, or all of the, Nuclear Agreement, and that context Hezbollah will reassess and say, “Well, maybe we can deal with such a US administration.” If Trump is re-elected, they will also have to assess. It will probably be much more of a government of locking the country down, longer confrontation, and a tougher stance. In either case, what greatly depresses me is that not only – and is that Hezbollah, which is the Kingmaker, has, you know, secured a security for itself through these, sort of, gambits or games with the United States, and the French initiative, without really US pressure and so on, has very little leverage. So, I guess it makes me even more, you know, I don’t know, depressed, I wouldn’t know, and I don’t want to use that word because we always have to find hope, but, yeah, I see – I’m not very optimistic.

Dr Lina Khatib

Okay, well, thank you, Paul. I mean, it is definitely concerning what you’re saying. We – I know Alia cited a bit of Steven Andrews’ question, but he also asked about investment in the port, so I’d like to give him the opportunity to ask that, if he’s still on the line, live.

Steven Andrews

Thank you very much, indeed. My question is really about the way the port used to be run, to the benefit of all the different parties who would negotiate amongst themselves trade – horse-trade, if you like, for how it operated, and that was seen by some as, in fact, an example of the way wider Lebanon worked. But I also relate that back to the investment in the port. Clearly, a lot of investment is needed. We’ve seen the failure of the rebuilding of a new approach to government. Are we going to see the failure of the rebuilding of the port? Because no-one will invest in resurrecting the past way of working. I’m just interested in your views on that, thank you.

Dr Lina Khatib

Thank you, and, I mean, for me, also, the issue of investment leads me to think of the regional picture. I mean, now, UAE and Israel have brokered an accord and, you know, could we see, for example, UAE wanting to invest in Beirut’s port, in terms of reconstruction and running it? Because perhaps this could be a way for that camp to have a bit of a foothold, so to speak, in Lebanon, which would grant them greater influence regionally. It would be an interesting step vis-à-vis Hezbollah’s influence, and, by extension, Iran’s, for example. Or would that actually be completely the opposite, would it actually make things more complicated by having a more direct, kind of, presence between these two entities? I’m just throwing these different scenarios. Perhaps, Joe, since you’ve been invoked a few times by Paul in the conversation, you might want to weigh in on this dilemma.

Joseph Bahout

Yeah, I was tempted to weigh in on this at this point because there’s something very fascinating. Alia alluded to it very quickly, there’s something morbidly fascinating about the port blast, unfortunately morbidly, but the port – Alia said, “It’s the heart of the Lebanese economy, it’s a crucial part of the Lebanese economic fabric and construction.” This is completely true, it’s very true, but more than that, and this relates to your question and the question of Mr Andrews, we often tend to forget that the Port of Beirut is, in fact, the heart and lung of the – of Greater Lebanon, of the creation of Greater Lebanon.

All Historians of economy of Lebanon and the Levant know, and Social Historians of Beirut know, that, without the decision in something like 1830, 1840, by the French and by some local notables, to create the port in Beirut, probably the republic of Greater Lebanon wouldn’t have seen the light. And this is where the morbid symbolism is awesome, is amazing. The port exploded a few weeks away of the commemoration of the centennial of this Greater Lebanon, and I can’t but think that the Beirut blast, the Beirut port blast, is, in fact, metaphorically maybe the end of the – or the reverse, I don’t know, the jury is still out, of this kind of Beirut, this kind of political economy for Greater Lebanon. So, it’s either the end of a nice success story that was called Lebanon for 100 century, or the start of a new one, I don’t know. And this will have to do with the questions that you raised about investments and etc.

So, I think that, to close on this point, the port’s explosion is something that goes much beyond the mere explosion of a vital service in a country of an infrastructure. It is really the heart of the idea of Greater Lebanon, and I think that this is crucially interesting, and I hope that certain articles will be read about that by people who know and write much better than I’m trying to do here orally.

Now, it has to do with the question of investment, as you said, Lina. Yes, you’re right, the Emiratis were among the first to show up and to raise their hands and say, “We’re here to reconstruct and to rebuild.” But this also doesn’t obliterate that, for example, part and only a part of the French Initiative was also driven by a kind of ambition to put a foot again on that level. I just said that it was the French who decided to create the port in the 1840s. The idea was that the port naturally would have been in Tripoli, and then it was decided it was Beirut. There’s a huge question here of fictional history. If the port would have – be placed in Tripoli, probably, Lebanon’s geography and Lebanon’s political economy would have been completely different. So, the French wanted also to – through their initiative, to build a port again.

You have to keep in mind that, when Macron came on September 1st and on October, I did – I forget the date, and end of September, he came along with Rodolphe Saadé, who is the son of Jacques Saadé, one of the biggest shippers in the world, and whose company, CMA CGM, is today the biggest investor in Beirut port and in Tripoli port, and so this dimension is utmostly present. Also, and here we complicate things, and I completely agree with your question and the premise of your question, the Turks also suggested and proposed to build a port, the Qataris did, and you can’t hear but keep in mind the staunch regional competition between the Saudi Emirati axis, the Turkish Qatari axis, the French, let’s say, attempt at keeping the Turks at bay from really pushing forwards in the Levant and in Libya, the big stakes, the huge stakes, of Eastern Mediterranean gas and maritime circuits, all this is present in this blast of August 4th, symbolically, again, highlighting that Lebanon’s history is tied to its regional environment and to the economic circuit to which it was tied for centuries.

And today, also, the reconstruction of the port and the competition about investments, not only in the port, but in the reconstruction of Beirut and also, in the recovery of the financial system, have to do on who will benefit, who will take the trumping card for the next century’s Lebanon political economy. I think these dimensions are over-present and, if we overlook them, we would really minimise the issue and the story. So, it’s really both a fascinating issue on the intellectual level, but also, a crucial question on the geopolitical competition level.

Dr Lina Khatib

Thank you so much, Joe, and, unfortunately, we’ve now run out of time. I know there’s many questions that have been left unanswered, but I hope people can follow the really good work of Paul, Joe and Alia outside of this event, and I want to thank the attendees for asking all those great questions, and thank our three guests today. Hopefully, we will continue the conversation, on Lebanon in the future, hopefully in collaboration with our dear colleagues, as well. So, thank you so much for joining us this afternoon, and goodbye for now.

Paul Salem

Thank you. Bye, bye.