What does the diplomatic crisis with Saudi Arabia mean for Lebanon?

The kingdom was a major investor in Lebanon but ties between them have strained over the past decade

Lebanon's Information Minister George Kordahi has put further strain on Beirut's ties with the Gulf. Photo: Reuters

When Najib Mikati became Prime Minister of Lebanon in September, he insisted in his first speech that restoring ties with the country’s allies in the Gulf was a priority for his government.

Three months later, Lebanon is facing another diplomatic crisis with Saudi Arabia, the second in six months.

Lebanese Information Minister George Kordahi said in an interview that the Iran-backed Houthi rebels in Yemen were acting in self-defence against foreign forces, comments that upset Riyadh.

A Saudi-led coalition entered the conflict in Yemen months after the fall of Sanaa in 2015 to support Yemen’s internationally recognised government.

Mr Kordahi's remarks sparked concern that the Lebanese political establishment was alienating itself from Saudi Arabia, a historic ally and a major investor the cash-strapped country cannot afford to lose.

“Lebanon was already at rock bottom and now it is isolating itself even more,” said Fadi Ahmar, a lecturer in Middle East studies.

Mr Mikati and Lebanese President Michel Aoun have distanced themselves from Mr Kordahi's remarks but stopped short from asking him to resign. They said his views did not represent the government.

Mr Ahmar said the deadlock may force the government to resign.

“There is a contradiction in Mikati’s behaviour. How can you mend relations with the Gulf but also cater to Hezbollah and its allies?” he asked.

Lebanon continues to face economic meltdown. Since 2019, the Lebanese pound had lost more than 90 per cent of its value as decades of corruption, mismanagement and a lack of foreign currencies devalued the pound, pushing nearly 80 per cent of the population into poverty.

A history of financial and political support

Saudi Arabia has a history of supporting Lebanon financially and politically, despite strained ties over the years as Iran-backed Hezbollah gains greater influence over political life.

The kingdom bailed Lebanon out when it was under financial duress in the early 2000s. Riyadh was also a major investor in the country's post-war reconstruction and helped broker the Taif Agreement in 1990, ending 15 years of civil war.

In addition to reconstruction funds, investment and aid, Saudi Arabia was a major source of tourism revenue for Lebanon in the early 2000s. The Gulf is still a major source of remittances for Lebanese reeling from economic collapse.

Lebanese Prime Minister Najib Mikati has said he wants to mend ties with countries in the Gulf. Photo: Reuters

Former Lebanese prime minister Rafik Hariri, a business tycoon who made his fortune in Saudi Arabia, brought the two countries closer during Lebanon’s war years.

Tourists from the Gulf packed the streets of Beirut and Mount Lebanon during the summer, providing a major source of income for businesses.

The tourists have almost completely vanished from Lebanon today. Saudi Arabia has barred its citizens from travelling to Lebanon for security reasons.

Broader support from Riyadh is widely considered by Beirut and western powers to be key to alleviating Lebanon's economic collapse, because the kingdom was important to the country's post-war revival.

Every time Hariri sought support or investment for Lebanon, whether it was to rebuild Beirut city centre after the war or secure donor funds, he would always knock on Riyadh’s door first.

In 2007, Saudi Arabia led pledge efforts in the Paris II donors conference, promising $1.1 billion to Lebanon out of $7.6bn raised. Saudi Arabia pledged at the same sum at the Cedre conference in 2018.

A year earlier, Riyadh and Kuwait injected $1.5bn into Lebanon’s central bank, saving the Lebanese pound from total collapse after a month-long conflict between Hezbollah and Israel.

The kingdom’s support earned Lebanon’s political elite the confidence of western and Arab backers.

Hariri's son, Saad, himself a former prime minister, has gradually lost support from the Gulf.

In 2016, he formed a unity government with Hezbollah that brought Beirut closer to the orbit of Iran. Lebanese-Arab relations have been strained since then.

That same year, Riyadh suspended a $3bn aid package to the Lebanese Army, after Lebanon refused to condemn Iranian attacks on the Saudi embassy in Tehran.

The economic meltdown of 2019 eroded what little confidence the international community, including Gulf nations, had left in the Lebanese elite.

Lebanese politicians have been widely accused of corruption and mismanagement. Political inaction has prevented reform, a crucial requirement to unlock billions of dollars in loans and debt relief.

More than 15 years after Rafik Hariri’s assassination at the hands of a Hezbollah agent, Lebanese politicians and the international community still consider Saudi Arabia as crucial to Lebanon’s revival.

At the height of Lebanon's energy crisis in July, the US and French ambassadors to Lebanon flew to Riyadh in an attempt to persuade the kingdom to become more involved in the country, but to no avail.

Mr Ahmar said there was already little hope of Saudi support for Mr Mikati's government. Mr Kordahi’s statement may be the last nail in that coffin.

He said Mr Kordahi should have resigned immediately to contain the crisis, but he was emboldened by Hezbollah's support.

“To make things worse, the prime minister and president had a mellow reaction to Kordahi's statement. The situation can only escalate now. They have made it clear that this is a Hezbollah government,” Mr Ahmar said.

Sheikh Mohammed bin Rashid, who at the time was Crown Prince of Dubai, and Lebanese prime minister Rafik Hariri in Dubai. Photo: AFP

Second Gulf crisis in six months

Lebanon has had strained ties the Gulf for the past decade as Hezbollah expands its influence in Beirut.

Kordahi's statement marks the second time this year that a Lebanese minister has criticised Saudi Arabia and the Gulf and drawn praise from Hezbollah.

The incident has cemented concerns in the Gulf that successive Lebanese governments have failed to curb Hezbollah’s influence on political life.

The Iran-backed group supports the Houthi rebels in Yemen, a group that has launched attacks against Saudi Arabia.

“Hezbollah terrorists control decision making in Lebanon, turning the country into an arena and a launch pad for countries that do not wish Lebanon and its people well,” the Saudi Foreign Ministry said on Friday.

In May, Charbel Wehbe, Lebanon's caretaker foreign minister at the time, suggested in a TV interview that Gulf states were responsible for the rise of ISIS and made derogatory remarks towards their people.

He resigned following an outcry from Gulf allies and Lebanese politicians.

Mr Kordahi, a TV personality-turned-minister, is renowned for his controversial opinions. He has expressed support and admiration for Syrian President Bashar Al Assad and Hezbollah leader Hassan Nasrallah.

His remarks about the Houthis prompted Riyadh to recall its ambassador to Lebanon for consultations. The kingdom gave 48 hours for the Lebanese ambassador to leave and banned all Lebanese imports.

Bahrain and Kuwait have followed suit.

Imports to the Gulf were one of Lebanon’s few sources of foreign currencies.

Mr Mikati vaguely suggested that Mr Kordahi should resign.

In a phone call late on Friday evening, he said he told Mr Kordahi to “appreciate the national interest and take the appropriate decision in the interest of Lebanon-Arab relations".

Mr Kordahi remains in a role that is essentially a government spokesman, despite international calls for his dismissal.