Lebanon 2012: Running to Stand Still

Each year, many ambassadors send Ministers a review of trends in their country, and thoughts on what lies ahead.

To share the more candid elements would be a bit of digital transparency too far, but here is a redacted version of what I have just sent. You can read the rest when it is released in thirty years, and hopefully not on Wikileaks in the meantime.

Diptel Beirut

Foreign & Commonwealth Office Diplomatic Telegram

Summary

A year more notable for what didn’t happen than what did. Lebanon braced for transition in Syria, and anxious at how violent it could continue to be. Martyrs and machiavellis, warlords and wasta. Political stalemate, but intensified scramble for power and patronage in next phase. More resilience than expected, including from bankers, army and diaspora. Refugees, sectarianism and international meddling the greatest Syria contagion threats. To get through 2013, Lebanon needs pluck, luck, and a few more bucks.

Detail

1. On the surface, Beirut is wearing it well. Christmas here, like the Pope’s visit, has both bling and powerful displays of interfaith unity. Last week, clerics of all sects discussed how over centuries they hid in caves or on mountains from regional tyrants and the ebb and flow of civilisations. The tyrants and empires have changed, and they are braced for them to do so again.

Politics

2. In Beirut’s plushest district, you can still see the twisted hulks of cars blown up in the tragic assassination of security chief al-Hassan in October. But politically, some kind of normality has returned. The opposition is boycotting events with the government, and some in the government trying to use this to consolidate their position. Ambassadors and emissaries scuttle between leaders in a well worn form of group therapy. The state remains stalemated – like European budget negotiations with RPGs. There are political squabbles over a law for next year’s parliamentary elections, oil and gas, public sector salaries. But these are cover for a more fractious fight over control of the country after the Syrian transition. And for broader anxiety over shifting tectonic plates in the region: Syria, Iran/Israel, Saudi/Iran, the rise of fundamentalism.

3. The key dynamic will be at what point Lebanese factions feel able to do a deal on the post-Assad modus operandi, which depends in some cases – sadly – on their external backers. Across communities, people complain about the oligarchs, but are anxious not to challenge the system that sustains them, for fear of what might replace it.

4. This year has been important in terms of what Hizballah did not do – join the Israel/Hamas clash; become heavily involved in Syria (though still much too much for our liking); block Special Tribunal funding or the arrest of some Assad allies; collapse the government; accept Syrian chemical weapons. The key to their future lies in their ability to prove they can put Lebanese interests first. Not easy given the external pressures, but the pieces of the kaleidoscope are in motion. Rhetoric aside, they don’t seek to confront Israel at this time, and calculate that they can get away with the odd drone given the extent of Israeli breaches of SCR 1701.

Economics

5. The heavyweight group of bankers who came to London earlier this month put a positive face on the economic situation – Lebanon is the only non-oil country in the region not to have asked for IMF help. Offshore gas is a significant long term opportunity, and has helped focus minds on averting conflict, though there is many a slip betwixt cup and lip. Meanwhile, the Lebanese diaspora keep the remittances coming. Trade with the UK, partly following our million pound British week, is up 32%. But in private, many worry about how long Lebanon can sustain the current situation. Away from the Beirut bubble, 40% are on the poverty line. With Gulf tourists going elsewhere, hotels are at 30% occupancy, and shopping malls taking 40% less than last December. Vital infrastructure reform is delayed until the politics settle, whenever that may be.

Syria Contagion

6. As our more detailed reporting/planning sets out, there are five principal Syria contagion threats. First, porous borders, leading to a further spilling of the conflict into Tripoli and the North. Second, growing refugee numbers (equivalent to 6m in the UK), with a tough Winter ahead. Third, the Palestinian camps, so far resisting being drawn into someone else’s fight, but facing new influxes since the regime attack on Yarmouk. Fourth, an increase in sectarianism, with lack of progress on political dialogue. And fifth, external manipulation, with too many countries ready to arm wrestle here. Lebanon could do with broadening Syria disassociation to regional disassociation.

What Next?

7. Our interests remain in Lebanon coming through change in Syria as unscathed as possible. We are playing our cards – growing military relationship, political influence, increased stabilisation funds, expertise and funding on refugees – in support.

8. Most years, we conclude that Lebanon is on a knife edge. But most years it made it through, and built up helpful muscle memory in the process. The fragility of the system is the secret of its longevity. The price is often inability to find durable solutions, and a perpetual hobbling of reform to maintain the status quo. The key in 2013, as in the past, is that no side can dominate – or all sides will lose.

9. We have a major stake in the success of Lebanon, and the coexistence in a troubled region that it represents. We need another year where we run hard to not go backwards. I would still buy shares in Lebanon 2020.