Saudi Arabia has accused Lebanon of declaring war and may even have held the country’s prime minister against his will.
But for all the bluster, the kingdom could find it has little leverage to deal with the real target of its wrath: Hizbollah, the Iranian-backed organisation that dominates Lebanon and is an increasingly powerful force across the region.
Saudi Arabia once wielded political influence in Lebanon, from substantial real estate investments to support for the Sunni bloc led by the family of Saad al-Hariri, the premier who stunned Lebanon by announcing his resignation from Riyadh this month. But that role has waned as its focus has shifted to other regional conflicts and its economic ties with Beirut have dwindled.
With Riyadh already facing international criticism for its heavy handed approach to Lebanon, the kingdom will now struggle to find ways to pressure Beirut into reining in Hizbollah.
It may instead be forced to backpedal on its threats or push for drastic economic measures that would bring the country to its knees — similar to the regional embargo it has led since June against Qatar, banning flights and cutting trade routes in an attempt to choke its rival Gulf state into submission.
“I hope there will be a settlement between the different political actors so they won’t do to Lebanon what they did in Qatar, in terms of an economic blockade,” says Marwan Barakat, chief economist at Bank Audi in Beirut.
Such harsh tactics may become harder to impose, with western governments pushing back against Riyadh. They have no desire to see further chaos in the war-torn region, fearing radicalisation and more refugees. On Wednesday, France said it would invite Mr Hariri to Paris in an effort to ease tensions and facilitate the premier’s eventual return to Beirut.
“[We] have been pretty clear that destabilising Lebanon any further is not in anyone’s interest,” said one western diplomat. “I think the Saudis realise that they cannot push much harder or they will shoot themselves in the foot.”
Mr Hariri’s resignation was widely believed to have been forced by Saudi officials and was followed by a ballistic missile fired by Iran-aligned Houthi rebels in neighbouring Yemen. Riyadh has fought a flailing three-year campaign against these rebels and now believes they are getting missiles training from Hizbollah. The ballistic missile attack was read as a message from Tehran, though Iran denied any role.
Lebanon has braced itself to become once again the focus of an increasingly confrontational Saudi-Iranian rivalry. Yet with so much foreign pressure and local resentment, Saudi Arabia may be unwilling or unable to push Lebanese Sunnis to violently confront Hizbollah.
“We have no desire for armed confrontation with Hizbollah,” said Okab Sakr, a lawmaker in Mr Hariri’s Future party. “I don’t think anyone wants Lebanese-Lebanese confrontation . . . [Hizbollah] must stick to politics and be a Lebanese political party. Otherwise, we face economic sanctions.”
Such sanctions could be devastating. Qatar, the world’s largest exporter of liquefied natural gas and one of its richest nations, has survived the Saudi-led embargo but Lebanon’s economy, already foundering, could be crippled, analysts say.
Its financial system is underpinned by money from abroad, much of that from the oil-rich Gulf. Those inflows bolster foreign currency reserves and service Lebanon’s ever-growing debt, which at almost 148 per cent of gross domestic product is one of the world’s largest.
Before the war in neighbouring Syria, which took a toll on Lebanon’s economy, Saudi Arabia and other Gulf states, once the backbone of its tourism sector, could have exerted more subtle pressure as they were more deeply invested in the country.
“I have all kinds of people calling me to ask: what if investments stop? And I say, anyway our FDI [foreign direct investment] is almost nothing. What is there to stop?” says Nassib Ghobril, head of economic research at Byblos Bank.
In 2008 and 2009, he says, foreign investment was 15 per cent of economic activity, with most of that money coming from the Gulf. By 2016, it had dropped to 5 per cent of GDP of about $53bn.
That leaves the remittances that are critical to Lebanese households. Up to two-thirds come from the Gulf, according to the International Monetary Fund. Riyadh could also try to block private-sector deposits, 21 per cent of which come from abroad, also mostly from the Gulf. These are critical to financing government borrowing to service the public debt.
It would devastate Lebanon but not Hizbollah. Bankrolled by Tehran, Hizbollah is widely believed to operate outside the banking system.
With little effective pressure, Emile Hokayem at the Institute for Strategic Studies says the best Riyadh can get from Hizbollah through negotiations is a “tactical agreement for Hizbollah to tone it down” in its public rhetoric. “If the Saudis wanted to inflict [economic] pain on Lebanon . . . then they could do it,” he adds. “I just don’t see how this helps achieve their goal.”
This article has been amended since publication. A graph about remittances that was included in error has been removed, as has a quote that contained a factual error
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