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Why is Hezbollah afraid of the IMF?

Crisis

While it accepts a limited assistance by the IMF, the Shiite party fears that key sectors such as the port and the airport could be placed under the international institution's supervision.

26/02/2020

As the Lebanese government struggles to extricate itself from the financial and economic abyss it is currently facing, the question of whether or not to resort to the International Monetary Fund (IMF) for financial assistance, which would place the country under its guardianship, remains controversial. The differences over this issue are no longer restricted to opposing political camps, but have also divided allies within the same camp, namely Hezbollah and Amal. While the first fears direct interference by the IMF whose decisions would have not only major financial but also political repercussions, the Amal Movement, Hezbollah’s privileged ally, is convinced that the only solution to stop the (financial and economic) collapse is through the assistance of the international institution. The terms of such assistance are yet to be defined.

Several sources have pointed out the gap between Hezbollah, which refuses to give a free hand to an institution it considers highly suspicious, and the speaker of the parliament, Nabih Berri, who has recently supported the IMP option, advocated for some time by his former adviser and now Finance Minister Ghazi Wazni.

Long before he became minister, Wazni had never hidden his preference - as an economist and researcher - to resort to the IMF; a conviction the Speaker of the Parliament ended up endorsing.

"Mr. Berri has recently become convinced that the help this institution can provide has become unavoidable in the light of the collapse," a number of economists and analysts revealed. The Amal movement has still not made this stance public for it contradicts Hezbollah’s point of view.

According to a source close to Hezbollah circles, what the pro-Iranian party fears the most are "the conditions the IMF may impose if the government decides to give it the green light." Among these conditions, an increase in the Value Added Tax (VAT) and gasoline taxes and even the reduction of the civil servants' salaries. Such highly unpopular measures would hit the party’s base particularly hard. But Hezbollah’s real apprehensions lay elsewhere, in particular concerning certain decisions which would be necessary, but would directly affect the party and its resources. This would be the case if the IMF is to impose strict control over the ports and the airport, considered to be lifelines for the Shiite party, in order to crack down on smuggling.

"For Hezbollah, which is already reeling from sanctions imposed by the United States, an intervention by the IMF in these sectors would help drying up completely its resources from outside the country and putting an end to smuggling operations at the port in particular,” said economic analyst Violette Balaa. This, she said, would explain why Hezbollah has so far refused the suspension of air links with Tehran despite the fact that the first confirmed case of coronavirus involved a woman who had arrived from Iran; which is "the country where the Shiite party continues to receive all forms of support and cash it needs."

Mohammad Obeid, a political analyst close to Hezbollah, argued that "it is not through the airport that the party receives its cash or weapons but rather through Syria ."

"This border crossing route is undoubtedly a red line for the party which will, in no way, accept its closure," Obeid said, adding that Hezbollah has long ceased to use the airport, where people from diverse political affiliations work, making it almost impossible to "receive anything without it being known."


Political agenda

According to Hezbollah circles, the Shiite party accepts that Lebanon requests only technical assistance from the IMF provided that this does not in any way affect the country's sovereign decisions concerning its economy and finances. "What worries the party is the political agenda which could be hidden under the label of economic and financial reforms," said Obeid who noted that the Amal movement does not have as much to lose as Hezbollah in this case.

On the contrary, by endorsing a more extensive intervention by the IMF, Berri would have the opportunity to present his credentials to the international community to which he is certainly closer than Hezbollah. He would also be able to pose as a savior of the Republic, especially since he is fiercely supporting the revision of the electricity plan and the inevitable reform of this sector, considered a top priority. "It will be a way for him to take revenge against the head of the Free Patriotic Movement, Gebran Bassil," said the analyst.

However, it remains to be seen how far Berri would be willing to go in supporting the idea of IMF intervention, knowing that he will never risk jeopardizing his strategic partnership with Hezbollah.

Analysts say that if Hezbollah insists on refusing a more substantial contribution than mere advice from the IMF, Berri will eventually let go and will certainly not go against his ally.

On Tuesday, Hezbollah's Deputy Secretary-General Sheikh Naim Qassem made it clear that his group will not "accept submitting to the IMF to manage the crisis" but will not oppose consultations with the fund.

"The whole question is what exactly the role of the IMF will be if the government decides to engage it and what would be the margin of manoeuvre to be granted," Obeid noted.


(This article was originally published in French in L'Orient-Le Jour on the 25th of February)


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