Arab official rules out aid for Lebanon under Hezbollah's sway

New government must 'show its independence', senior diplomat says

Lebanon's Prime Minister Hassan Diab said Arab Gulf countries would be his first stop as he seeks to revive the economy after taking office in January 2020. Reuters

Arab Gulf states are unlikely to come to Lebanon’s financial rescue unless the new government in Beirut shows it can act independently of Hezbollah, a senior Arab official said.

New Lebanese Prime Minister Hassan Diab, who is supported by Hezbollah, said as soon as he took office last month that he would lead a rescue operation for the economy and his first trip abroad would be to the Arabian Gulf.

The Lebanese economy and financial system plunged into crisis in October, hitting incomes, employment, the banking system and the currency, which has lost at least one-third of its value in unofficial trade.

Gulf countries “have been very clear that it is important for the new Lebanese government to show its independence and to stay away from regional polarisation,” the Arab official, who requested anonymity, said on the sidelines of the Munich Security Conference.

“You cannot and come and expect money from the Arab Gulf then Hezbollah the next day completely targets the Gulf,” the official said, referring to tirades by Hezbollah officials against countries in the region.

In 2018, mostly western donors pledged $11 billion (Dh40.4bn) for an economic rescue package for Lebanon.

Saudi Arabia contributed $1bn but the donors did not release the money because fundamental reforms they had asked for were not implemented.

The Institute of International Finance said in a report last month that the Lebanese economy retreated rapidly in 2019, with gross domestic product estimated to have contracted 3.8 per cent.

The country’s public debt is at 166 per cent of the GDP, one of the highest ratios in the world, and reached $89.5bn at the end of November.

The deteriorating economy contributed to the outbreak of a mass protest movement in October to demand the removal of the entire political class.

Lebanese authorities have increasingly used violence to subdue the protests, and Hezbollah supporters have attacked the demonstrators.

The Arab official said consecutive Lebanese governments had failed “to manage the economy and provide jobs and basic services”.

He said the failure was similar to Iraq, where the government is also under the sway of non-state groups supported by Iran.

“Corruption became so brazen and so open,” the official said, referring to Lebanon and Iraq. “People did not accept it anymore.”