Crisis-hit Lebanon will benefit from thaw with Bahrain

Children ride a horse along a pavement by a public beach in Lebanon's southern city of Sidon on May 21, 2023. (PHOTO / AFP)

Crisis-hit Lebanon’s recent reconciliation with Bahrain amid a flurry of regional relations reset could open more channels for dialogue, as the country charts its way out of an economic and political impasse, analysts said.

The two countries’ decision to restore full diplomatic relations on May 20 ends more than a row that started in October 2021 after former Lebanese information minister George Kordahi criticized Saudi Arabia’s role in the costly Yemeni war. Saudi and other Gulf countries recalled their diplomats over the incident. Kordahi resigned in December 2021.

The United Nations Economic and Social Commission for Western Asia estimates that more than 70 percent of some six million of Lebanon’s population are now living in poverty

Lebanon has also been without a president since October last year after former president Michel Aoun completed his term. Legislators are unable to agree on electing the next head of state, delaying much-needed reforms, including a key to unlocking a $3 billion funding bailout from the International Monetary Fund (IMF).

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Currently, the country is led by caretaker Prime Minister Najib Mikati, who said on May 20 that his country appreciated and welcomed Bahrain’s decision to resume ties. 

Deniz Istikbal, an economics researcher at the Foundation for Political, Economic and Social Research, a think tank in Ankara, Turkiye, noted that the reconciliation between Lebanon and Bahrain “is not independent of regional developments”. 

“Lebanon is in a huge economic crisis. One of the main reasons for this crisis is relations with the countries of the region.”

Istikbal added that better ties with Bahrain may also open channels of dialogue for Beirut with other regional countries. 

“In addition, the normalization of diplomatic relations may lead to an increase in aid and investments in the economic crisis. Bahrain’s sovereign wealth fund is important in this sense…The IMF cannot find a solution to Lebanon's economic crisis. A regional support can alleviate the economic crisis,” he added. 

Regional support for Lebanon may come from the Gulf Cooperation Council. The GCC constitutes around 50 percent of Lebanon’s export markets, the Arabian Business quoted Paul Abi Nasr, CEO of Polytextile and board member of the Association of Lebanese Industrialists, as saying in 2021.  Around $250 million worth of imports were reportedly affected when Saudi Arabia banned Lebanese imports.

The recently concluded 32nd Arab summit in Jeddah, Saudi Arabia on May 19 — which also saw the participation of Syrian President Bashar al-Assad in his first regional summit since the outbreak of the Syrian civil war in 2011 — had issued a declaration expressing solidarity with Lebanon. 

The Jeddah declaration also urged all Lebanese parties to engage in dialogue in order to elect a president “who fulfills the aspirations of the Lebanese people”, the regular work of the constitutional institutions, and “the adoption of the required reforms to get Lebanon out of its crisis”.

In March, Ernesto Ramirez Rigo, the head of the IMF mission visiting Lebanon, warned that the country “is at a dangerous crossroads” and that inaction by Lebanese leaders would leave the nation in a “never-ending crisis” possibly spiralling into hyperinflation.

The United Nations Economic and Social Commission for Western Asia estimates that more than 70 percent of some six million of Lebanon’s population are now living in poverty.

Since late 2019, Lebanon has been grappling with the worst economic crisis in its modern history, due to decades of corruption, politicking, and mismanagement. 

Anis Khayati, an economics professor at the College and Business Administration at the University of Bahrain, told China Daily that Bahrain’s resumption of diplomatic relations with Lebanon “comes in the context of the calm environment in the region that accompanied the China-brokered Saudi-Iranian agreement”.

He said the return of relations indicates the role that Iran and its allies might play in reducing tensions with Bahrain, which has a Shia majority. The resumption of diplomatic relations may also be part of a prior arrangement that falls within the general framework of the Saudi-Iranian agreement.

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 “This makes Hezbollah currently the strongest component of the Lebanese state,” he said. Hezbollah, a Shia Muslim political and military outfit, wields significant influence in Lebanon. It opposes Western meddling and Israel’s operations in the Middle East. 

In his speech at the Arab League summit, Mikati described it as the “healing wounds” summit, following the Saudi-Iran détente and Syria’s return to the Arab fold, Lebanon’s National News Agency reported.

“With the improvement of regional relations, the crisis can be overcome,” said Istikbal from Türkiye.

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