Securing international funds should be top of new government's agenda, analysts say
Lebanon election result exposes nation's vulnerabilities
Lebanon's election results will offer some comfort to the Future Movement of Prime Minister Saad Al Hariri, aligned with Saudi Arabia and the United States, but Hezbollah, the Tehran-allied Shiite party, had more to smile about.
A new electoral law meant two thirds of seats in the 128-member parliament had been predicted in advance, meaning a largely flat campaign. But with a level of acceptance that little would change, the split outcome of Sunday's vote means an immediate political crisis, or major changes in policy, are unlikely.
A European diplomat said Mr Hariri, a Sunni who returned to the premiership two years ago, may well have expected a worse result.
"All the main parties seem to have won," the diplomat said. "I suspect Hariri is relieved as he was not sure he would win in Tripoli [the mainly Sunni northern city] after his loss in the municipal elections there," in 2016.
The obvious winners, however, were Hezbollah, which increased its MPs from eight to 15. Parties and individuals more or less aligned with the group are likely to hold a majority in the 128-seat parliament.
How this affects the composition of the cabinet remains to be seen, and there is likely to be a period of political wrangling.
The 'consensus' confessional system underlying Lebanese politics reserves the post of prime minister for a Sunni, the presidency for a Christian and the office of parliamentary speaker for a Shiite – meaning Mr Hariri, as leader of the largest Sunni group, is set to continue as prime minister.
Hezbollah’s allies include the Shiite Amal movement, led by 80-year-old Nabih Berri, parliamentary speaker since 1992, and the Christian Free Patriotic Movement established by President Michel Aoun, 83. Hezbollah also backed Jamil Al Sayyed, the 68-year-old former intelligence chief and a close ally of Syrian President Bashar Al Assad.
Mr Al Sayyed was elected in Baalbek-Hermel in a victory that says much about the sectarian factionalism of Lebanon's politics, as well as the omnipresence of Syrian loyalties despite the civil war.
He resigned as Lebanon's security chief under severe pressure after the assassination of Mr Hariri's father Rafik, then prime minister, in 2005. He was later arrested and spent four years in prison while enquiries into the killing were under way. He notionally ran as an independent in the election but declared allegiance to Hezbollah during the campaign.
Hezbollah's performance will contribute to wider regional tension as the May 12 deadline approaches for US president Donald Trump to decide whether to abandon the 2015 international nuclear deal with Iran.
Iranian media on Monday hailed the Lebanese election result, while Israeli Education Minister Naftali Bennett wrote on Twitter that Israel would now "not differentiate between the sovereign state of Lebanon and Hezbollah, and will view Lebanon as responsible for any action from within its territory".
Relations between Lebanon's sect-based parties have been under pressure from regional rivalries between Saudi Arabia and Iran, and as a consequence of the Syria war, in which Hezbollah has sent fighters to support Mr Assad while the Future Movement sympathises with the rebels.
The most serious challenge for a new government, which may take months to form, will be balancing the books. Lebanon’s debt-to-GDP ratio is 150 per cent, one of the world’s highest, with the fiscal deficit at nine per cent of GDP. An $11-billion international package of soft loans and grants agreed at April’s CEDRE conference in Paris hinges on progress, verified by the World Bank and others, in reducing budget deficit and debt and in carrying through wider reforms.
"The first priority of the post-elections cabinet has to be to stimulate growth," Nassib Ghobril, chief economist at Byblos Bank, told The National. "If we expand the size of the economy, it will help slow down and reverse the growth of the debt ratio. This has happened before, as the debt-to-GDP ratio declined from 182 per cent of GDP in 2006 to 130 per cent of GDP in 2012, due to what had been rapid growth in the Lebanese economy between 2007 and 2010, before a civil war broke out in neighbouring Syria.
Mr Ghobril said the IMF's "first impulse" of advocating tax increases and lifting subsidies was the "wrong recipe for Lebanon", while the government's energy would be better spent tackling tax evasion.
"Only about 30 percent to 35 percent of companies and individuals in Lebanon pay their taxes in full," he said, "while a large percentage of the population does not pay fees on electricity or on renewing their car registration, to cite a few examples."