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What's happening in Lebanon, and why its stability matters

  • Lebanon's prime minister returned to Beirut Tuesday night for the first time since his shock resignation on November 4
  • Militant group Hezbollah's role in the country takes center stage amid escalating tensions between Saudi Arabia and Iran
  • Turmoil in Lebanon could trigger a new refugee crisis and conflict with Israel
A poster of Lebanese Prime Minister Saad Hariri is seen hanging on a pole in the capital Beirut on November 17, 2017.
JOSEPH EID | AFP | Getty Images
A poster of Lebanese Prime Minister Saad Hariri is seen hanging on a pole in the capital Beirut on November 17, 2017.

Lebanese Prime Minister Saad Hariri returned home late Tuesday night following a confounding few weeks that began with his shock resignation from Riyadh, Saudi Arabia, where many Lebanese officials believe Hariri was "held hostage".

On Saturday, Hariri traveled to Paris, France, where he was hosted by French President Emmanuel Macron and promised to "clarify" his position on return to Beirut.

In his absence, billboards reading "We want our PM back" and "Waiting for you" have lined the streets of the Lebanese capital in a rare show of unity among the country's many competing political and religious groups.

The unexpected development was widely read as having been forced on Hariri by Saudi Arabia to counter its arch-rival Iran's influence in Lebanon and the region, specifically via its powerful Shia proxy, the political party and militant group Hezbollah.

Amid the confusion, many now fear Lebanon is once again on the brink of turmoil.

"The U.S. and EU worry that increasing instability in Lebanon will further destabilize an already volatile region," said Marianne Knaevelsrud, Middle East analyst at Protection Group International.

"Lebanon hosts more refugees per capita than any other country, a huge economic burden and potential source of insecurity. The West is concerned that political uncertainty could exacerbate the refugee situation or allow militant groups to expand their influence." Lebanon hosts nearly 2 million Syrian refugees.

Further fears concern escalating tensions between Hezbollah and neighboring Israel, which in 2006 led to a month-long war.

King of Saudi Arabia Salman bin Abdulaziz Al Saud (R) shakes hands with Former Prime Minister of Lebanon Saad Hariri (L), who resigned recently, at King Salman Air Base Airport in Riyadh, Saudi Arabia on November 11, 2017.
Bandar Algaloud | Saudi Royal Council | Bandar Algaloud | Saudi Royal Council | Anadolu Agency | Getty Images
King of Saudi Arabia Salman bin Abdulaziz Al Saud (R) shakes hands with Former Prime Minister of Lebanon Saad Hariri (L), who resigned recently, at King Salman Air Base Airport in Riyadh, Saudi Arabia on November 11, 2017.

"An attack on our independence"

"We will not accept (Hariri) remaining a hostage whose reason for detention we do not know," Lebanese President Michel Aoun said in response to the resignation, accusing Saudi Arabia of "an attack on our independence." In his initial speech from Riyadh, Hariri, who is Sunni Muslim and holds Saudi citizenship, accused Iran of interfering in his country's affairs and claimed he feared for his life.

After more than a week of silence, Hariri gave a tense televised interview suggesting he may not resign if Hezbollah, the most powerful wing of the Lebanese government, agreed to disarm and withdraw from regional conflicts.

This appeared to mark the manifestation of Saudi foreign policy objectives through coercion — through Hariri, it aims to isolate Hezbollah and push it out of war zones like Syria and Yemen where the Islamic kingdom has its own interests.

In Syria, for instance, Iranian-backed Hezbollah militants fight alongside President Bashar al Assad's forces against a myriad of Sunni militant groups, some of which are funded by the Saudis.

"Lebanese politics has always been defined by competition and cooperation between sects," said Faysal Itani, a senior fellow at the Atlantic Council's Rafik Hariri Center for the Middle East. "The fault line today is Sunni-Shia, centered on the status of Hezbollah and its militia specifically."

Supporters of Lebanon's Hezbollah party parade to mark the last day of Ashura ceremony in Beirut.
Aziz Taher
Supporters of Lebanon's Hezbollah party parade to mark the last day of Ashura ceremony in Beirut.

The only group to maintain a paramilitary force since the end of Lebanon's bloody 15-year civil war in 1990, Hezbollah, which is financially and militarily supported by Iran, ignores the official Lebanese policy of staying out of regional conflicts. When this backfires, Lebanon suffers.

"I don't think anyone, including Saudi Arabia, is under the illusion that the Lebanese government has any control over Hezbollah's behavior abroad," Itani said, noting that part of the group's popularity in Lebanon's Shia areas stems from its substantial provision of social services neglected by the state.

"There is no Lebanese 'government' separate from its constituent parts because Lebanon's sectarian elites are the government, essentially, and Hezbollah is the most certainly powerful of those elites."

Lebanese politics: It's complicated

Lebanon has long been the ground where larger powers' proxy battles for regional influence play out. The small country of 4 million is home to 18 different religious communities thanks to arbitrary border-drawing by French generals, who established the state in 1926. Lebanon won independence in 1943, maintaining a French-inspired system of pluralistic democracy.

Its unique consensus government, tailored to deal with a diverse population, rests on a power-sharing structure whereby the prime minister, president and speaker of the house must come from the country's three largest religious groups: Sunni, Maronite Christian and Shia, respectively. Regional powers, therefore, often exert influence in the country through these various groups.

"Sunni-Shia competition has deepened as a result of Saudi-Iranian competition," said Itani. The long and short of it? When regional powers are at odds, Lebanon gets caught in the crosshairs. This played out in 2005, when Hariri's father and then-prime minister Rafik Hariri was assassinated in a plot believed to be the work of Hezbollah and the Syrian government.

Beirut, Lebanon
PATRICK BAZ/AFP/Getty Images
Beirut, Lebanon

The younger Hariri took office in 2016 in a power-sharing agreement with President Aoun, a Maronite Christian favored by Hezbollah, following two years during which Lebanon essentially had no government. "Hariri had reached a compromise with Hezbollah allowing him to be prime minister at the cost of granting Hezbollah its military autonomy and electoral advantages," Itani said. "This essentially drove what was likely Saudi pressure on Hariri to resign."

"Lebanon has suffered from political stalemate for many years, and Hariri's resignation is a major setback for progress made since Michel Aoun was elected president in October 2016," Knaevelsrud said.

Qatar-style sanctions

The threat of Saudi-imposed sanctions, like those imposed on Qatar in June, now looms over Lebanon. But unlike Qatar, Lebanon has neither massive gas reserves nor a high-income economy. Saudi Arabia and its Gulf allies provide the bulk of foreign investment in Lebanon, and Saudi tourism is a major source of foreign currency.

"Lebanon needs commercial exchange with, and investment from, surrounding countries in order to stay afloat," Fouad Zmokhol, president of the Worldwide Association of Lebanese Businesspeople, told CNBC from Beirut. "A risky environment would stop even internal investment until things calmed down."

On a positive note, however, Zmokhol lauded Lebanon's central bank for having calmed the country's markets in light of the crisis. "The central bank is extremely liquid in both gold and currency reserves, and it will do everything possible to keep the Lebanese pound stable."

"The support we've been shown from the international community shows the importance they see in keeping Lebanon stable," he added. "Lebanon is a model of freedom, democracy, and coexistence in a region where this is rare."

The French government, among others, urged Hariri's return "to ensure the country's political system continued to function," according to Reuters. Hariri's visit to Paris was per French President Macron's invitation.

Hariri has promised to "explain everything" after meeting with President Aoun in Beirut. It seems no amount of explaining, however, will give the Lebanese the answers they want on their country's future.

Recent turmoil in the historically stable Saudi Kingdom as a result of government purges and a more aggressive foreign policy led by the young Prince Mohammed bin Salman is a telling sign of more shifts to come. "Crown Prince Mohammed bin Salman appears to be consolidating power and expanding his influence," Knaevelsrud said.

"The proxy conflict with Iran is increasingly shaping the country's foreign policy decision making," she added. "Therefore, for Riyadh, renewed political paralysis in Lebanon appears to be preferable to an active Hezbollah-led government."