Australia/Israel Review

The Slow Death of Lebanon

Jul 27, 2021 | Jonathan Spyer

Lebanon today: A failed and collapsing state (Credit: Karim Naamani/ Shutterstock)
Lebanon today: A failed and collapsing state (Credit: Karim Naamani/ Shutterstock)

Lebanon is currently in the grip of the worst economic crisis in its history. There are daily shortages of fuel and electricity, a chronic lack of medical supplies, and an absence of essential medicines in hospitals. Some 77% of Lebanese households are unable to purchase sufficient food. The Lebanese pound has lost 90% of its value over the last two years. Lebanese citizens, meanwhile, are prevented from withdrawing more than US$100 per week, as foreign currency reserves grow thin. The situation is reaching a point of no return, with the real possibility of widespread hunger. Lebanon is, today, by all measures a failed and collapsing state.

How has the country reached this point? Less than two decades ago, Lebanon was revamping its image as a centre of commerce and tourism on the Mediterranean coast. The “March 14” Movement, named after the popular mobilisation which forced a Syrian withdrawal in 2005, was riding high. It was presented as one of the few successes of what was then the US Administration’s strategy of regional democratisation. I visited the country in that period, in 2007. A palpable longing for normality could then be discerned among younger Lebanese. The civil war was already a receding memory. What remained of it, among Sunnis and Christians at least, was a kind of dread of the possibility that political violence might return. The Israeli occupation in the south had ended in May 2000. Normality seemed within reach.

What went wrong? What went wrong was discernible also back then. It was evident that there were two powers in Lebanon. The first, as represented by the March 14 Movement, was ostensibly forward-looking, oriented toward the West, toward commerce and toward normality. The other power was that of Iran, via its oldest franchise, the Lebanese Hezbollah movement. This interest had its own military power that outmatched that of the state and dwarfed the other irregular military presences in the country. It had its own economy, too, its own sources of income, its own smuggling routes.

The project of the Iranian element was that the two Lebanons should continue to exist indefinitely. The former was to provide a convenient carapace of normality and legitimacy beneath which the latter could continue its allotted tasks in Teheran’s long war against Israel. 

Supporters of the March 14 project had a tendency to avoid the discussion of hard-power issues. This in retrospect was to prove fatal.

Any chance that the Lebanon of March 14 might mount a defence in arms of its vision of the country ended in the events of May and June 2008. In a brief conflict on the streets of Beirut, the forces of Amal (a militia allied with Hezbollah) and Hezbollah contemptuously brushed aside the haphazard military mobilisations of the pro-March 14 Sunni and Druze forces.

From this point on, the die was cast. It was clear that there would be no further attempt at real resistance to the Iranian project in Lebanon. What there would be instead would be obfuscation and denial. The Iranian approach fitted perfectly the desire of the Lebanese to ignore reality.


In the years subsequent to 2008, events followed a downward spiral. The Syrian civil war brought some 1.8 million refugees to Lebanon, further straining the country’s fragile infrastructure. The war dealt a crippling blow to the tourism sector, which had accounted for around 7.5% of Lebanon’s GDP. Growing Saudi and US discontent at the reality of Iranian power in the country came to a head in 2015-2016. In early 2016, Riyadh announced the withdrawal of its deposits from the Central Bank of Lebanon. This followed the cancellation of US$4 billion of aid to the Lebanese armed and security forces.

The US “Hezbollah International Financing Prevention Act” of 2015 hit hard at the financial services sector, another key element in the Lebanese economy. Saudi Arabia, Bahrain, Kuwait and the United Arab Emirates issued advisories against travel to Lebanon at that time. This ended the country’s traditional role as a permissive playground for visitors seeking a congenial respite from Gulf restrictions.

At this stage, Lebanon was seeking to manage a public debt of US$69 billion, totalling 150% of GDP. But as the official economy foundered, the parallel Iran/Hezbollah shadow economy prospered. Not, however, in such a way that the average citizen benefited. 

The porous or Hezbollah-supervised borders between Lebanon and Syria allowed for smuggling of oil imports and their resale in Syria, to the benefit of Hezbollah. Captagon amphetamine pills, manufactured in Syria, and cannabis were smuggled the other way, finding their destination in European cities or in the Gulf via Hezbollah-supervised routes. Needless to say, none of the profits from this burgeoning sector went to service the national debt, or to benefit the crumbling public infrastructure.

In March 2020, against the background of countrywide, multi-sectarian protests against corruption, poor public service, youth unemployment and mismanagement, Lebanon defaulted for the first time on its debt payments. A reform plan was approved by the International Monetary Fund, but following the Government’s resignation after the Beirut Port explosion in August 2020, negotiations became stalled. The Lebanese economy contracted by 20% in 2020.

This is the background to the current grave crisis in Lebanon. All the elements – US sanctions, Saudi and international withdrawal of aid and investment, subsequent debt default and loss of confidence, resulting currency devaluation, a shadow economy benefiting only itself, and a paralysed political system – are all directly traceable to the distorting effect that the presence of the pervasive Iranian project on Lebanese soil has brought.

From this point of view, the current situation stands as a stark warning to all countries faced with infiltration by the Islamic Revolutionary Guard Corps (IRGC) and its various militia franchises. These are good at building paramilitary muscle and converting it into political power. They have no knowledge of or interest in economics. As a result, the net outcome of their taking of de facto power in a country will be that country’s eventual ruin and impoverishment. Lebanon is now the case study for this process.

From Israel’s point of view, there is little to be done but to continue to guard the borders. There is no reason to suppose that the current chaos in Lebanon will incline the Iranians and their proxies toward military adventures in the south. 

Regarding any international response, international aid should be made contingent on the disarming of the Iranian proxy, and the thorough reform of the political system. Any other remedy runs the danger of offering support to Lebanon’s current Iran-created dysfunctionality.

The key point: Lebanon was the first Arab state to undergo internal collapse, and consequently the first to receive the intentions of the IRGC’s brand of political-military takeover. With allowance for local variations, similar Iranian efforts are now underway in Iraq, Syria and Yemen. 

The significance of the current events extends far beyond Lebanon’s borders. Iran is responsible for the slow death of Lebanon.

Jonathan Spyer is a Ginsburg/Milstein Writing Fellow at the Middle East Forum and director of the Middle East Center for Reporting and Analysis. This article first appeared in the Jerusalem Post ( © Jonathan Spyer, reprinted by permission, all rights reserved. 


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