In pursuit of compromise

The US approach to Hezbollah and the new Lebanese government

The US approach to Hezbollah and the new Lebanese government

The United States’ approach to Lebanon seeks to reconcile two often conflicting policies: supporting the Lebanese state, army, and government, while pursuing a maximum pressure campaign on Hezbollah. During the past months, the “Iran lens” defining US policy has overshadowed the commitment to supporting stability and building state institutions in Lebanon. This was clear in the sanctions against Jammal Trust Bank in August, leading to its closure, and in the deliberate delays in releasing military aid until December 2019.

This binary approach, and Hezbollah’s response to it, climaxed during the government formation process this January. Hezbollah and its allies, who face looming sanctions, managed to produce a government that is acceptable to the US and the international community, and so could receive a green light for external assistance—if and when it succeeds in passing necessary reforms.

Many observers had anticipated an escalatory response following the early January assassination of Iranian major general Qassem Soleimani, a personal friend of Hezbollah secretary general, Hassan Nasrallah. Instead, there was a conscious effort on the part of Hezbollah to avoid confrontation through this government lineup. For the first time since the party entered government in 2005, Hezbollah lacks direct representation in cabinet. And, for the first time since the Syrian era in the 1990s, a foreign minister has been appointed who has no known bias in favor of the Syrian regime or Hezbollah. That the majority of ministers are also US citizens could also be seen as a sign of appeasement.

Given the inflexible and authoritarian nature of Lebanon’s political class, Hezbollah included, this is a rather exceptional effort and compromise in government formation. The timing of the new government, announced just over two weeks after Soleimani’s assassination, says volumes about the level of Hezbollah’s fear of the repercussions of a Lebanese financial meltdown and the desire for a bailout.

This policy also reflects the changes in the organization’s nature; Hezbollah has been playing an active role in managing other battlefields. The group has become a hybrid between a political party and a “consultancy” with an elite fighting force. In a nutshell, Hezbollah no longer wants Lebanon to be a proxy battleground, as it has been since the 2000 Israeli withdrawal, and would like the US and Israel to meet it half-way. The response to the Soleimani killing will be restricted to expelling US forces from Iraq. Hezbollah has and most certainly will play a role, at least politically, in uniting Iraqi Shia factions against the US presence. Whether the US will confine this confrontation to Iraq, rather than escalating in Lebanon, remains to be seen.

ERRATIC POLICY-MAKING

Although the US administration seems keen on de-escalating, unilateral, erratic policy decision-making could suddenly shift gear. With two secretaries of state, two defense secretaries, and four national security advisors in three years of this presidency to date, one should not expect coherent or consistent foreign policy in the region. The exception is only when this foreign policy is a factor in local elections, such as the “Deal of the Century,” and the maximum pressure campaign on Iran, given its significance to the Trump pro-Israel evangelical electorate. The Soleimani assassination, months before the US elections, is case in point. Such unpredictability might impact what seems to be a consistent US policy in Lebanon.

Trump’s administration is reportedly considering expanding its sanctions, likely through the Global Magnitsky Act, to include corrupt politicians and their known business cronies. Such an escalation might devastate what little trust the Hassan Diab government has. If, however, the sanctions are designed to target high-ranking members of the corrupt elite—though not at the level of senior political figures—they could go further than any cabinet in meeting the protestors’ demands. Given the current composition of Parliament, it is highly unlikely that the new cabinet will effectively take on corruption. This is why some DC pundits believe that sanctions against the corrupt elite could empower the current cabinet, and create space for more daring reforms. Regardless, this new batch of sanctions is overdue and could impact US policy in Lebanon. For now, external assistance awaits reforms, and the US could act as a facilitator if and when these changes take place. The first sign of this conditional engagement will be when the US Ambassador Elizabeth Richards visits the prime minister, once his government wins the vote of confidence.

One of the major obstacles that post-war Lebanon has faced is the absence of adequate transparency tools that, if there, would have lead to greater public accountability. Access to information has been limited, and mandatory disclosure mechanisms are verging on nonexistent. Such limitations have encouraged many forms of corruption.

Despite the fact that the past five years have seen efforts to provide the public with greater transparency tools— Law 28 (2017) on access to information, Law 83 (2018) on whistle-blower protection, and Law 84 (2018) on enhancing transparency in the petroleum sector—post law scrutiny has shown that the state had little intention of using such tools to promote public accountability and incubate trust amongst the different stakeholders. The October 17th revolution was in part fueled by years of bottled up outrage and frustration over the corrupt and self-serving practices of politicians—Lebanese citizens are demanding more accountability.

Our aim at the Lebanese Oil and Gas Initiative (LOGI) is to ensure that Lebanese citizens benefit economically from their natural resources. In that vein, in December 2019, and in partnership with the Heinrich Böll Stiftung Middle East, we collaborated with investigative journalist Jad Ghosn to study the sales revenues of seismic data. Since 2003, Lebanon has been receiving a percentage of the revenues from the sales of its offshore seismic data packages. Clarity around how these revenues are managed is needed if we are to ensure that proper governance over the petroleum sector is maintained and public accountability is enhanced. In particular, we were interested in understanding how these revenues were accumulated—the legal framework—and how they are managed. The ultimate goal was to recommend concrete action steps that would ensure proper public oversight leading to accountability around this public money.

A series of interviews and literature reviews were undertaken. Different stakeholders—one from the Lebanese Petroleum Administration (LPA), three MPs, and three experts in the field— were consulted on the issue. After all the data was compiled and analyzed, LOGI released a study this past December which detailed the following:

1. Two companies, Petroleum GeoServices (PGS) and Spectrum, signed separate contracts with the Lebanese government that granted the latter a percentage from the revenues earned by each of the companies upon the sales of the seismic data packages to interested parties. The seismic surveys were completed in 2014 but began in 2000 (Spectrum) and 2006 (PGS).

2. Our research indicated that the government received 80 percent of the revenues from the sale of seismic data; the companies 20 percent. However, LOGI was unable to confirm this as the contracts are currently not publicly available. (Public release would require a determination on commercial sensitivity by the National Anti-Corruption Agency, which has yet to be established.)

3. The accumulated revenues are deposited in a bank account run by the Minister of Energy and Water and the Director of the Oil Installations of Lebanon.

4. As per the LPA, the accumulated revenues until October 2019 stood at $43.03 million.

In light of the above, LOGI recommends the following to enhance public ability for oversight:

1. Audit the account in which these returns are deposited through an independent auditing company—selected through a transparent procurement process—to vet the incomes deposited, their sources, and the expenditures. The objective of this audit is to follow transparency measures still absent in the management of public funds, notwithstanding the size of the account.

2. Publish the agreements by virtue of which the Lebanese state collects a share of the sale of seismic data, while withholding information that could jeopardize the interests of the state vis-à-vis the companies—this falls within the maintenance of competitiveness. (According to the stakeholders, publishing the agreements could be detrimental to the public interest, as disclosing such information could negatively affect the competitiveness required for the companies interested in the licensing rounds, and so weaken the state’s capacity to negotiate with other companies that could be contracted in the future to perform additional surveys.)

These recommendations, along with the full investigation, can be found on LOGI’s website. Despite the fact that the oil and gas sector is not a magic remedy that will help Lebanon overcome current economic, fiscal, and political difficulties, it does represent hope for the Lebanese. This is why it is vital to safeguard this hope by ensuring that moving forward, the petroleum sector will be held to the highest standards of public oversight and accountability.